How to create capital loss with options (or otherwise)

Discussion in 'Options' started by bpj, Oct 11, 2019 at 9:33 AM.

  1. bpj

    bpj

    I am looking for a way to create a capital loss. I thought that I could achieve it by using options on equities. Something like a wash sale to carry this loss through to a new tax year. I was thinking I could buy stock and sell it at a loss by exercising an OTM put option but then - how to buy stock back at the put strike price?
     
  2. bpj

    bpj

    Alternatively, how do I sell stock in a private transaction via my brokerage account in the U.S.? I want to sell at a price below the market value and then buy it back from the buyer.
     
  3. Wheezooo

    Wheezooo

    DON'T!

    I'm breaking into cold sweats just reading this.
     
  4. bpj

    bpj

    Why? It might have different tax consequences in different countries. I should be allowed to sell at a loss to whomever I want to - it is not illegal
     
  5. Bum

    Bum

    Sounds like you got some really bad tax advice.
    If you have a position that's currently in a loss, you can close the trade to offset a gain then buy back in 30 days.
    Don't intentionally create a loss to offset gains.
     
  6. bpj

    bpj

    You see, in a country where I am resident for tax purposes, the rules are different. Therefore, I was wondering if there is a way, for instance, to do a stock transfer with a cost base set at my discretion instead of just using the market value
     
  7. Need an easy way to create capital loss? Let me trade your money! :D
     
    MoreLeverage, GregorySG9 and Bum like this.
  8. Bum

    Bum

    There are ways to transfer profits from this year to next year.

    Example 1:
    1-Buy a January DITM Put & DITM Call (Delta near 1) on a good volume ETF (SPY, QQQ, etc..) or stock(AAPL, MSFT, etc...).
    2-Last week of December close the losing position.
    3-First week of January close the winning position.

    Example 2:
    1-Buy SPY and short QQQ. (Use highly correlated markets.)
    2-Last week of December close the losing position.
    3-First week of January close the winning position.

    ***Win should offset the loss. Loss will be reported on taxes this year & profits reported next year.
    ***Can do the same thing with the underlying in other highly correlated pairs (SPY vs. QQQ, GLD vs. SLV, SPY vs. DIA). Go long one and short the other.
    ***Price of underlying needs to move away from current price so you have a loss & profit.

    ***NOT TAX ADVICE, just ideas.
     
    Last edited: Oct 11, 2019 at 4:34 PM
    ironchef likes this.
  9. ETJ

    ETJ

    Be very cautious about the tax opinions/advice you get here - form 550 should be your guide.
     
  10. Bum

    Bum

    Agree, as I'm neither a tax expert nor from his country, but intentionally looking to create a loss to offset a profit seems to make no sense in any country. :)

    ***My comments are not "advice", just suggestions/ideas.