The wash sale rule can apply totrades involving stock options.Options present two different types of problems in connection with thewash sale rule. First, if you sell stock at a loss, you can turn that saleinto a wash sale by trading in options. And second, losses from the optionsthemselves can be wash sales. It is absolutely crucial to build at least a basic understanding of tax laws prior to embarking upon any options trades.
In this article, we will look at how calls and puts are taxed in the US, namely, calls and puts for the purpose of exercise, as well as calls and puts traded on their own. lption But before we go any further, please note that the author is not a tax professional and this article should only serve as an introduction to the tax treatment of options.
We will ignore the effect of the covered calls for this example. Here are the resulting tax ramifications. Example 4Can wash sale treatment be triggered when a stock, such as AAPL, is sold at a loss but you are bullish on technology in general and you replace the position with QQQ. Users are not required to enter putor call, just enter the symbol. Different sources list options symbolsdifferently.
For example, option symbol IBMAJ may be listed as.IBAMJ,or -IBMAJ. If you sell a call option for a loss, and then purchasethe same call option within the 1-day wash sale window, GainsKeeper willdefer the loss and add it to the basis of the option. The same scenarioapplies for the sale and purchase of put options.GainsKeeper calculates wash sales withinindividual securities traded long or short.
GainsKeeper does adjust forwash sales across short-to-long holdings. GainsKeeper will not generatea wash sale ks what is a put option and a call option wash sell an equity at a loss, and then open a call optionfor the same equity within the wash sale window. Please consult your taxadvisor if you wish to capl significantly identical securities.