Ok, I have a short naked June SPX call with a 2k loss, currently. Now, I'm comfortable holding for four more weeks to see if the loss shrinks with time. But can I do this instead? Buy the call back, book the loss and then sell it again, or sell it again in a different account, or sell it again with a slightly different strike or expiration date? Seems like a no brainer thus I sense it a disallowed wash sale. What say ya'll?
Yeah, but you're not straddling tax-years so again, why? And yeah, it's illegal. The idea of gaming wash sale regs is to cover a natural (long shares) with the synthetic (short shares) or call w/synthetic call, etc., in the following year; rinse, repeat. Natural -> synthetic -> natural... You're in an arb as a result so the haircut under PM is trivial.
This will answer your question...they discuss options specifically. I recall that for stocks you not only can't repurchase the same stocks...you can't even re- purchase stocks in the same sector. https://www.taxtips.ca/personaltax/...ficial-losses-and-other-disallowed-losses.htm
Maybe not the best place to ask tax questions, based on the responses. SPX Options are 1256 Contracts and MTM at the end of each year. They are not subject to wash sales. You can buy/sell/buy as many times are you want, but 1256 contacts do not differentiate realized from unrealized gains and losses at year end. You gain nothing by realizing the loss to just enter the trade again at the same or higher price. You only benefit if you can get a better price after fees. From IRS Form 6781. "Mark-to-Market Rules Under these rules, each section 1256 contract held at year end is treated as if it were sold at fair market value (FMV) on the last business day of the tax year. The wash sale rules don’t apply. If your section 1256 contracts produce capital gain or loss, gains or losses on section 1256 contracts open at the end of the year, or terminated during the year, are treated as 60% long term and 40% short term, regardless of how long the contracts were held. The mark-to-market rules don’t apply if you properly and timely identified a section 1256 contract as a hedge."
As long as you truly believe that the price of SPX is going to tank in June, there is no reason why you cannot do it. It's perfectly legal. This is a very common practice in options trading called rolling. You get more losses with your rolls though if SPX keeps going up.
Damn, I should have known this. Thanks. (Just for the jollies Now I'm wondering what about replacing the short SPX with 1000 short SPY.)