Patrice,
This can get confusing. The tax problems address the BUYERS of stocks and options. Little is said about the writers (sellers of options).
"In general, the wash sale rule denies a tax deduction for a security SOLD (as a buyer selling his/her purchase) at a loss IF a substantially identical security, or an option to acquire that security, is purchased within 30 days before or 30 days after the original sale."
That means that one can not sell AAAA to take a tax loss and also purchase AAAA within the 61-day period that extends 30 days before and 30 days after the sale. A call option is certainly, an option to acquire the security. It would thus invoke the wash sale rule for an investor to buy and then sell AAAA to take a loss and again purchase that AAAA call wihtin 30 days before or after the stock sale.
NOTE! Various series of call options are NOT generally considered to be indentical securities. If one buys/sells AAAA January 50 CALLs to take a loss (by a closing sale), you may then buy ANY OTHER AAAA CALL option without jeopardizing the taxable loss from the sale of the AAAA January 50 CALL. Just DON'T try it again with the same call!
FINALLY, if would also be acceptable for an investor to sell a call to take a loss and then immediately buy the underlying security. This would not invoke the wash sale rule.
So Patrice, your AAAA to BBBB would not be considered a wash sale!
You're situation is not uncommon to wait until Monday to "clear the books." Especially, since you are so close to being "in the money." If you are exactly on the dime you may not be called out!
Next time, if you really want to hold on to the stock, go ahead and fork out the minor dollars to close your position. BESIDES, PLEASE, PLEASE, PLEASE UNDER WHAT I'M GOING TO SAY TO YOU!
LESSON:
Does it make sense to hold on to a CC when the majority of the profit is gone? It is like this, would you rather hold on to a 1/4 point CC for one week or cover for 1/4 and then sell another round of CC (rolling up one or two strike prices) for the next month for 1 point? 1/4 pt. vs. 1 pt. in your pocket? Don't sweat the 1/4 points! Go for the turnovers and take advantage of option time erosion working for you and against your call buyers! |
