wash sale on options

If you buy a call and then sell it at a loss, and then buy another call (same stock) is that a wash sale? Same with puts.

 

https://www.investor.gov/introduction-investing/investing-basics/glossary/wash-sales

Wash Sales
A wash sale occurs when you sell or trade securities at a loss and within 30 days before or after the sale you:

Buy substantially identical securities,

Acquire substantially identical securities in a fully taxable trade, or

Acquire a contract or option to buy substantially identical securities.

Internal Revenue Service rules prohibit you from deducting losses related to wash sales. For more information about wash sales, read IRS Publication 550, Investment Income and Expenses (Including Capital Gains and Losses).

 

Yeah dude I did check before posting here.

 

Well, I'm not allowed to give tax advice, so posting a direct quote from a government website that answered your question, was the best I can do.

 

Were they the same strike?

 

There are rules about out of the money vs in the money. And puts vs calls.

if I recall, out of the money are not considered substantially similar; but in the money are.

Best to talk with an experienced accountant. As a lot of the wash sale rules I think are determined by court precedence.

it’s all very complicated if you do a lot of options because then you also have the stradddle rule.

 

Different strike then no. BUT, the important thing to know is how a wash trade works, did you know you can add a dissalowed loss to the cost basis of the later transaction. Nobody ever told me that when I started, but a wash sale is basically nonconsequential, its designed to prevent taking a capital loss at the end of the year. You need to research this, if you have disallowed losses your tax software might not be adding the cost basis to the next trade.

 

Ok what if I buy 50, not 100, shares of ABC stock on 1/2/2021. Then on 1/3/2021, I buy an OTM put, which expires out of money. So it's a loss. Because I bought the stock less than 30 days prior, does that mean I can't claim the loss?

 

Huh? Don't know what you mean. Anyway, the stock and the call are not the same security. Is this a joke?

 

How was it not clear?

1/2/2021 - buy 50 shares of ABC stock
1/3/2021 - buy an OTM put by ABC stock
2/1/2021 - put expires OTM

Is the put a wash sale?