The third type of straddle strategy applies specifically to tax planning and operations. It's usually used in options and futures transactions to create a tax shelter. In practice, the investor who has a capital gain arranges his or her investments to create a visual loss from an unrelated trade. This last trade is structured to offset the gain in the current year and delay collecting the gain until the ensuing tax period. So, one of the positions accrues a gain which is not realized, while the other is showing as a loss.
The trade with the loss is closed before the tax year ends; which offsets the gain. When the new tax year begins, the creation of a new position is initiated in order to offset the risk from the position which is left over from the previous year.
Through the use of multiple straddling transactions, gains can be delayed indefinitely over years and years.