Author Topic: Opposing Leveraged ETFs and recharacterizations to minimize taxes  (Read 395 times)

Offline justin451

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I was thinking of buying SPXS (Direxion Daily S&P 500 Bear 3X Shares) and SPXL(Direxion Daily S&P 500 Bull 3X Shares).
The plan is to wait until there is a decent deviation in the S&P and recharacterize the loser.
Granted if the market is a flat line for years I'd be guaranteed to lose tons. On the other hand, if the market moves even 11% in either direction in the recent future I could save 30% in taxes.

As an example, if the market drops 30% I'd lose 90% of SPXL and recharacterize that to Roth thereby paying taxes on the lower amount .
I imagine I'd gain 90% on SPXS and that'd balance out if there was no expense ratio (which is highish 1-1.1%).

I don't see anyone talking about this and wonder why. I realize it could be risky, but perhaps it is more so than I thought.
What do you think?