You own 100 shares of GE. Sell the 100 shares of GE for a loss of $10. Next, buy 1 Sept 22 call 24.5 strike for $0.04. The call purchase will trigger the wash rule, so the cost basis for the call is $10.04. Next day buy back 100 shares of GE. Following day, sell the Sept 22 call for $0.02 giving you a loss of $10.02. You have just harvested your losses. You can do the same without options if you have used FIFO accounting in the past. Using just stocks, do the following: You own 100 shares of GE. Buy another 100 shares of GE, this doubled your holding to 200 shares of GE. Next day, sell 100 shares of GE for a lost of $10. This lost is tax deductible if you used FIFO accounting. If you used LIFO in the past then only the options method will work.
Interesting. Surprised that it's that easy to get around the wash sale rule. I'll ask my accountant about it.