Home > The Business of Trading > Taxes and Accounting > Wash sales on vertical spreads

Wash sales on vertical spreads

  1. Suppose I have a vertical spread on TSLA:
    - short Feb'2018 290 Put
    - long Feb'2018 250 Put

    and the 290P has unrealized loss.

    If, today (Dec 27), I roll down the short 290P to short 280P (of the same Feb maturity) to realize the loss on 290P, will this loss count towards the disallowed loss for wash sales?

    PS: My broker uses Apex for clearing.
  2. A judgement call, and it can depend on what software you (or your broker) uses, e.g. Gainskeeper. But regardless of software, you're responsible for the final determination for your tax return. Anyway, you might want to do a spread where the legs clearly have different economics, rather than a 10$-wide Feb vertical. Or close the whole existing $40-wide vertical and put on another spread in a different expiry month later. The market will always be here.
  3. Thanks for your reply. If I roll out this single leg Feb 290P to Mar 290P instead, does it help reduce the likelihood of the "substantially identical" call by Uncle Sam? :confused:
  4. The short answer is "yes," but in your shoes, I would roll the G290P to a M250P (or similar) , making the whole spread into a calendar from a vertical, thus clearly different economics. But I'm not a lawyer, yadda yadda.
  5. Thank, I think I got the gist, but I try not to dramatically alter my original geeks exposures...

    In fact, my real situation is more complicated; I have tons of legs with different maturities on dozens of tickers, and I really have no idea how IRS would determine anyone should track how to perform cost basis adjustment if the wash sale rules were to enforced...
  6. http://g2ft.com/resources/straddles.html
    You can only deduct the portion of the loss that is greater than the gain on any open offsetting positions at the end of the year. If you have multiple offsetting positions, you sum the ones with gains, ignoring the ones with losses.