So Vanguard Prime Money Market is yielding 0.6. All other "Safer" money markets are yielding even less. This when just a couple of months back Prime was yielding more than what you could get in an FDIC insured MM account with a bank. While Bank MMs have also dropped their interest rates, Mutual MM fund yields have basically collapsed.
All of the above to simply explain I'm looking at selling OTM Puts to generate Income and wanted to know tax treatment. I learnt gains / losses from options are capital gains, all short term unless options are actually held over a year (and even here there are some exceptions). More curious was the fact index/bond/futures options get a more favorable treatment of 60/40 long term/short term tax rates. So now I have one question for those might be doing what I'm about to try, or otherwise use options regularly in their portfolios.
If I sell options on SPY - ETF that invests in the S&P 500 index - will I qualify for the favorable 60/40 tax treatment? I'm thinking not and only institutions that can actually sell options directly on the index may be able to do that. However, thought I would ask.