If you have realized capital loss on stock XYZ, is it considered as wash sale if you use XYZ options to establish another similar position within the wash sale time frame? Thanks!
IRS is very non-specific regarding options, but I would answer the question "no". If the wash-sale rule applied to options in most cases, traders would never open a spread trade.
From Fairmark.com: Wash Sales and Options You don't actually have to purchase stock within the wash sale period to have a wash sale. It's enough if you merely enter into a contract or options to buy replacement stock. Capital Gains - The Wash Sale Rule - Top page in our explanation of the wash sale rule. The wash sale rule prevents you from claiming a loss on a sale of stock if you buy replacement stock within the wash sale period. We provide an overview of the rule in Wash Sales 101, and all the details in subsequent pages.
seems pretty clear from IRS pub 550 http://www.irs.gov/publications/p550/ch04.html#d0e12561 A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: 1. Buy substantially identical stock or securities, 2. Acquire substantially identical stock or securities in a fully taxable trade, or 3. Acquire a contract or option to buy substantially identical stock or securities.
IMHO - gray area. Buying an 70-85% delta call/put is not substantially identitcal to stock. The greek risk even at that delta level will hopefully get you off. Now Via.a via.b -that is another story.