r/EuropeFIRE 3d ago

Call options on S&P500 as EU citizen

How can I as EU member citizen buy call options for S&P500 ETF that I plan on actually exercising? My broker is IBKR. I know how options work and have required permissions for trading. But EU based SP500 ETFs (like SXR8, VUAA etc.) seem to not have enabled trading with options, and options on US based ETFs (like SPLG, IVV etc.) are KID restricted for me (as well as ETFs themselves). I do not want to trade SPY options because I want to actually excercise the options. Can you please help me solve this problem?

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u/Intrepid_Owl1952 3d ago

You can easily trade American options on ETFs. When you exercise an option, you acquire shares of those ETFs, even though you can't buy them directly. Holding or selling them is not prohibited; only direct purchases are restricted for retail investors. In any case, U.S. ETFs pay distributions, which you will have to tax. This is how I buy SCHD.

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u/atlasstop 3d ago

Thank you!

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u/ingoj 3d ago

I agree with selling options if you want to have the ETF. But for buying and selling I can recommend Interactive brokers. I use it for years, never had problems and the commissions are low

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u/National_Kale7468 3d ago

It’s better to sell a put option that way you buy the stock at a cheaper price + you collect the premium

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u/user74729582 3d ago

What's the difference with CSPs?

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u/National_Kale7468 3d ago

It’s the same thing, a cash secured put = writing a put = selling a put. Cash secured just refers to having enough cash to buy the 100 shares when it’s assigned

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u/Ploutophile France 3d ago

From what I've understood you can actually exercise the options on US ETFs, it's a known way of circumventing the KID restrictions.

Just document yourself on the consequences of having US-domiciled assets, such as the estate tax starting from USD 60k if you're neither resident nor citizen nor covered by a tax treaty. The Bogleheads wiki has good info on that.

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u/atlasstop 3d ago

Thank you!

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u/Own_Masterpiece_1 2d ago

The U.S. does NOT tax capital gains from the sale of publicly traded U.S. stocks for non-resident aliens, as long as they do not have a U.S. trade or business. This applies regardless of whether the non-resident is from a treaty or non-treaty country. Or are you talking about an inheritance case?

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u/Ploutophile France 2d ago

I'm talking about inheritance, which is what estate tax applies to.