wash sale rule

Discussion in 'Professional Trading' started by copa8, Apr 9, 2003.

  1. copa8


    hi all,

    would appreciate any and all your answers to my question regarding the wash sale rule, as it pertains to stock/index options.

    i know that if i bought, sold, then bought back again XYZ stock within 30 days, a wash sale occured. my question is, would it be a wash sale if i had bought, sold, then bought back the same underlying security or index, but each had different strike prices and expirations?

    thanks in advance.
  2. the answer is yes. the same series option chain is considered as the same underlying security.
  3. copa8


    hi all,

    this is in addition to my previous question re: wash sale. again, i would welcome all your needed advice.

    for 2002, i had the following qqq options trades, all within 30 days:
    1. bought 9/25, sold 9/30 = +500.00
    2. bought 9/25, sold 10/01 = -170.00
    3. bought 10/09, sold 10/25 = -1,300.00
    4. bought 10/09, sold 10/10 = +50.00

    is it correct to say that only #2 and #3 are wash sales?

    thank you in advance.
  4. nkhoi


    wash sale apply to stock only. I am not even sure if QQQ itself classified as stock or not.
  5. Ebo


    QQQ and other ETF's are treated as a stock.
    If you have many purchase and sales the IRS would need a fine tooth comb to find the wash sales.

    For you wash sale experts>>>>>If you do not take a loss on a wash sale, assume you do not trade in the name for whatever the rule is 30 days........I assume you can take the loss at a future date?

  6. This is how you would report the 4 transactions in your example, with some made up figures to better illustrate:

    #1 Cost = 2000 Basis = 2000 Sold = 2500 Gain = 500
    Gain for tax purposes = 500

    #2 Cost = 2000 Basis = 2000 Sold = 1830 Gain = (170)
    Gain for tax purposes = 0

    #3 Cost = 2000 Basis = 2170 Sold = 700 Gain = (1300)
    Gain for tax purposes = 0

    #4 Cost = 2000 Basis = 3470 Sold = 2050 Gain = 50
    Gain for tax purposes = (1420)

    Total = 500 + 0 +0 -1420 = 920

    Your losses aren't recognized for tax purposes if the wash sale rules apply. Instead, the loss is added to your new investment to form your new basis. This continues forward until you either have a net gain or the wash sale rule doesn't apply.
  7. copa8


    thanks to everyone who offered advice. they were very helpful.