How does wash sale work with options if you buy back less than before?

Discussion in 'Taxes and Accounting' started by GreenGobbler100, Apr 11, 2019.

  1. I started with $10,000 and I played weeklie options a lot. I got it up to $35,000 in From September to November. I traded every day SPX weeklies. I then lost $15,000 the last week of November. My total profits were $10,000.

    Now here's where it gets tricky.
    I have a Job that puts money into my IRA automatically every two weeks. So during December I put in about $200, twice. So total of $400. This is sometimes considered as the same identical similar security.

    I have also been trading Futures the whole year, and I am up only about $1000. But I was buying and selling Futures throughout December.

    Will the IRA contributions and the Futures buying and selling before 30 days were up from selling the last SPX weeklies trigger a wash sale so I have to pay taxes on the full $25,000 gains on $SPX?

    I know if you buy 100 shares, then sell them, rebuy 20 shares you only have to pay taxes on 20 shares. How does it work with options? If I buy 5 Ocotber 3000 strike for $10 each and sell for a loss, then rebuy 5 October 3100 strike for $2.50 each... does it count each one as a contract so I can't use those loses even though I bought much less money value?

    Thank you!
  2. Robert Morse

    Robert Morse Sponsor

    That was very confusing and your contributions to your IRA have nothing to do with wash sales. It’s also unclear to me if you’ve been trading in your IRA or an individual account.

    You should check with a professional, but it’s my understanding that Futures and SPX are 1256 contracts, subject to MTM treatment and not subject to wash sales. If you trade in your IRA you don’t have to report the earnings or losses at all.
    piezoe likes this.