Re: [amibroker] OT: Congress considering financial transaction tax.

["Potato Soup" <potatosoupz@xxxxxxxxx>]

You won't have to hope, if this tax is imposed the whole system will indeed collapse.

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From: "Edward Pottasch" <empottasch@xxxxxxxxx>

Date: Thu, 3 Dec 2009 22:26:14 +0100

To: <amibroker@xxxxxxxxxxxxxxx>

Subject: Re: [amibroker] OT: Congress considering financial transaction tax.

trading will become impossible when they introduce this tax. Trading 1 ES mini will cost 280$ for a round trip. So I wonder who will still able to trade? Daytraders certainly not. I will certainly not invest long term in US companies who are just looting. Managers make on average 350 times that of the average worker. Yesterday I heard someone saying in the US the managment makes on average 400 to 600 times that what the average worker makes. Now who want to invest in that? Stock market listed companies are just vehicles for huge salaries and bonuses and then you go bankrupt and do it again. Their stock values only go up because they print more money and got to put it somewhere.

 

Doubt that they will introduce a transaction tax globally. When they introduce it in Europe and the US we just go gamble in Asia. I think this transaction tax is very unfair and if it gets there I hope the whole system collapses.

 

 

 

 

----- Original Message -----

From: MarkK

To: amibroker@xxxxxxxxxxxxxxx

Sent: Thursday, December 03, 2009 9:52 PM

Subject: RE: [amibroker] OT: Congress considering financial transaction tax.

 

Options won't allow you to escape the tax apparently.   They will be taxed on the underlying "notional" value.

Take SPY for example.  Trading at 110.  If you buy one call at the money today's Dec 110 call cost is $2.22.  That means your cost to buy the call is $222.  The "notional" value of the call however is $110 x 100 = $11,000. So your 0.25% tax on $11,000 is $27.50 .  That means your tax is really 12% on the money you lay out, not 0.25%.  Double the tax for a roundtrip for a total of 25%.  That means you have to have a 25% return on your call just to break even not counting commissions!

The cash settled SPX is roughly the same.  Buy an 1100 SPX Call today at $22.0   Your cost for the call is then $$2200.  The notional value of the call is 1100*100 = $110,000.  The transaction tax is $275.  You will have to have a 12% gain to break even on a one sided transaction and 25% to break even on a two sided tax.

The advantage of the cash settled option is that it is taxed 60-40 (60% long term, 40% short term rates). 

Hopefully the tax if passed will only apply to stocks and futures and options will be exempted.

MarkK

From: amibroker@xxxxxxxxxps.com [mailto:amibroker@yahoogroups.com] On Behalf Of Potato Soup
Sent: Thursday, December 03, 2009 3:28 PM
To: AmiBroker (Discussion List)
Subject: [amibroker] OT: Congress considering financial transaction tax.

 

To my fellow American AmiBroker users. Just curious if everyone here is aware that the bill to impose a quarter percent tax on every stock trade (both ways, win or lose), as well as a .02% tax on every derivatives contract is gaining serious steam in Washington and the mainstream media, including CNBC.

This woud kill liquidity, destroy small and large traders, increase spreads and volatility, and erode capital investment in US companies, thereby causing more unemployment. It will also result in captal flight to Asian markets and the end of America as the financial center of the world.

If you're not on the phone giving a talking to your congressional rep, and not writing newspapers and speaking out, your days as a trader are probably numbered. If you think this tax can't pass, take a look at every other example of so called bills that could "never pass".

Here are the details: http://www.bloomberg.com/apps/news?pid=20601087&sid=adcaJQ1Xp4_w&pos=8

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