Section 1256 Contracts and the 60/40 Regime

There are two tax regimes for derivatives, and which one you are in is decided by the instrument, not by anything you do with it. Everything in section “Taxation of Equity Options” — equity options, holding periods, wash sales, straddle rules — is the ordinary regime. This section is the other one, and for a high-bracket investor it is the more favorable of the two by a wide margin. It is also the one people accidentally opt out of by trading the wrong ticker.