How I understood it, extremely simplified: Suppose during 2023, you make $1B from short-term trading. If that's all that happened, you'd be taxed for short-ter

How I understood it, extremely simplified: Suppose during 2023, you make $1B from short-term trading. If that's all that happened, you'd be taxed for short-term capital gains on it. But also, this happens: July 1, 2022: Place a large bet "A" on S&P 500, and a separate large bet "B" against the S&P 500. July 1, 2023 (365 days later): Suppose S&P500 is up. Sell your bet B. You lose $1B in short-term gains. July 2, 2023 (366 days later): Sell your bet A. You make essentially the same amount that you lost yesterday, $1B, but in long-term gains. Total for 2023: $0B net short-term gains, $1B net long-term gains, taxed at a low rate.