Futures are a different animal. Futures and options on futures are mark-to-market each day based on the settlement price, or in other words, they are Section 1256 Contracts. Consequently, any open futures position (outright or options on futures) held from the last trading day of the year in December into the first trading day of the year in January will be marked at the settlement price of the last trading day. That means if you hold an outright future or option on futures position into the new year then the gain or loss will be counted on the calendar year the futures position was open, despite not being closed.

Let’s do an example with an /ES contract

  • Dec. 31, 2018: Buy to open 1 /ES contract @ 2500
  • End of day: /ES settles at 2505
  • Since it settled 5 points above your basis (2505-2500), you will be assessed $250 ($50/point x 5 points = $250) in gains for 2018 since futures are marked-to-market, despite anticipating to close in 2019.

Throughout the year this may not be an issue, but you may need to keep an eye on any futures positions held at the end of the year.

To learn more about Section 1256 Contracts, please click here.