A tactic that is used in futures and options trading to create tax benefits. By definition, it is a combination of two mostly identical futures contracts (a short futures and a long futures) whose prices tend to move in opposite directions, making a loss (gain) on one price offset by a gain (loss) in the other. The straddle is established by selling the out-of-the-money futures shortly before, whilst selling the in-the-money futures in next year. This tactic has the effect of pushing taxes back one year. An investor with a capital gain may embark on a tax straddle in order to create an artificial offsetting loss in the current year, while postponing a gain from the position to next year.

This was formerly a common practice until the IRS ended it by a legislation requiring all gains and losses related to futures contracts be realized at the end of each year, for tax purposes. This implies that all open positions will be treated as if they were closed on the last day of each tax year.