Reporting an Option Straddle what do "Name of Contract", "Component", & "Amount" mean on "Schedule of Straddles and Components"

[TaxesPayTeachersPlusOtherThings]

I'm trying to enter a Straddle Loss Summary and I put the Section A - Losses From Straddles info for each leg of the straddle. Then I click Done and it takes me to "Reporting an Option Straddle" and asks for lines of "Name of Contract", "Component", & "Amount." The only description here is "The IRS form instructions require you to list each straddle and its components on a separate schedule. Enter your statement below."

Is each line an option contract? What are the components? Is the Amount the number of contracts?

This is horribly written at least for me and I haven't been able to find any clarification anywhere from TurboTax/Intuit, IRS (as it doesn't list the schedule).

[Frederick Oberlader]

The good news is I am a former options trader and I am a tax lawyer.

The bad news is I am not an accountant or a return preparer.

How do you not know what the name of the contract is? For example, if I buy an index option on S&P the contract name on CBOE is "SPX" and then if its a call the whole name will be something like "SPX-yyyy" where the "yyyy" part encodes the type of option and so on. How could you buy a straddle and not know what the underlying was? How is it not on a broker's statement. Something is very wrong here.

For those who wish to step in, a plain vanilla straddle is the purchase of a call and a put separated in strike, call above put, typically (but I never traded retail or thru RAES) executed as a single order. I might say bid for a 220/320 October straddle 100 contracts at 32 on SPX" so how did you even order it without knowing the strike prices and components and symbols?

[TaxesPayTeachersPlusOtherThings]

Unfortunately @Frederick Oberlader, that's not very helpful to me as I didn't see any mention of what the "Component" is vs the "Contract" in the explanation which is most of what I was asking. I did know all of these, but TurboTax's terminology is non-standard and uses terms with overlapping definitions (as your explanation did) but you're required to actually put specific text in each field, not random approximations. If anyone is intent on answering the asked question or best can speak for TurboTax then please answer.

The "Contract" should be the whole thing (and you said it was (e.g. "SPX-yyyy") but then what of the "Component" that TurboTax is asking for? What schedule is TurboTax going to put it on (which it doesn't say at all)? If you meant that "SPX-yyyy" in your example was the "Contract" and the descriptive text is the "Component" then you could say so. I think in your example it would be "at a 32 strike".

Try googling the following and you'll see how non-standard the use of these terms together are. TakeInvestopedia's "Options Contract: What It Is, How It Works, Types of Contracts" page which is a decent intro, but none of these.

google: options trade Contract Component

[fanfare]

If you don't know what this terminology is, you are probably not doing a hedging straddle and you have nothing to report beyond Schedule D.

@TaxesPayTeachersPlusOtherThings 

[fanfare]

An option is a contract, therefore the option you entered into is  named on your confirmation slip.

A straddle involves two options , the components aka legs are Option No.1 and Option No.2.

[cusip]

Hey, in case  @TaxesPayTeachersPlusOtherThings or someone else will stumble on the same thing, like I did...

I just went off the call with Turbotax expert and they said that this particular screen applies only in case if you have some straddle trades that were carried over end of the year, which would imply some proceeds at fair market value on the last business day of the year. You'd likely see something in fields 8 to 11 of your 1099-B in such case.

In my case, all my straddle positions were opened and closed during same tax year, and were reported by my broker in form 1099-B along with all other option trades. Fields 8-11 of 1099-B all are empty.

So the Turbotax expert suggested that I do not fill out this confusing screen. Basically, I just responded "No" to the Turbotax question regarding Section 1256 and straddle trades, which has removed the entire section from my Wages & Income area.

I hope this helps.

[Philbo]

Yes, the lack of explanation or example is disappointing. That said, the information you need can be found on a 1099 supporting worksheet from your broker, e.g., 1256 Gain Loss Worksheet. Use this example to find what you need for each column of the TurboTax form: 

   Name of Contract:  IBM 240318C00060000

   Component:  IBM 18MAR24 60 C

   Amount - Gain or Loss:  $15,000 

[fanfare]

IRS Instructions Form 6781.

Don’t include in Part II a disposition of
any of the following.
• A position that is part of a hedging
transaction.

• A position that is part of a straddle if all
of the positions of the straddle are
section 1256 contracts.

In other words, for most run-of-the-mill active investors who trade futures,
this is of no concern. Part II can be ignored.

@Philbo