Hi All,

Newbie here. For those of you who trade Nadex spreads and binaries, how are earnings taxed? Are earnings taxed at a flat rate (e.g., 15%) or at ordinary income rates?

Thanks! Aaron


Ok…I’m not a lawyer or tax attorney, nor do I play one on TV so take this with a salt flat of salt.

That said…Nadex MIGHT bee seen as a contract or straddle but might also be seen as a swap. (largely depending on who your tax repairer is but the IRS itself hasn’t seem’d to have decided itself yet.)

if its a swap it still had ordinary gain or loss treatment, not lower Section 1256 60/40 tax rates

If its a contract or straddle it gets taxed at 60% long term and 40% short term, regardless of how long the contracts were held. (that’s 60% of it being taxed at 15% and 40% at 30%…or whatever it is this year.)

Talk to your tax preparer and get their opinion on it.

this has always been vague in Apex precisely because no one wants to get sued if the IRS decides to come after you because you zigged instead of zagging the year they make do their minds.