7 Genius Options Tricks to Slash Your Tax Bill & Boost Portfolio Gains

Tax-efficient investing has emerged as a cornerstone of wealth preservation in modern finance. While options trading often carries perceptions of complexity, these instruments offer unique tax advantages that traditional equity positions cannot match. The IRS applies distinct treatment to various options strategies—from covered calls to straddles—creating opportunities for savvy investors to optimize their after-tax returns.

Strategic use of options can defer capital gains, convert ordinary income into lower-taxed long-term gains, or create tax-loss harvesting opportunities without sacrificing market exposure. The key lies in understanding how different contracts—whether they expire worthless, get exercised, or are closed early—trigger specific tax events under Section 1256 contracts or wash sale rules.