I understand the implications with the wash-sale rule with stock and option's trading, but it is interesting to see how it works with debit spreads, where for example you buy one 50 December call of XXX and in the same time sell one 55 December call of XXX.
2007-05-04 08:03:59 · 5 answers · asked by malivo 1 in Business & Finance ➔ Taxes ➔ United States
The wash sale rule does not apply because you have not closed a position for a loss, and when you close the spread the options you will not be replacing a position closed for a loss.
However, the straddle rules do apply. See page 58 of
http://www.irs.gov/pub/irs-pdf/p550.pdf
Addendum
rhsaunders is absolutely wrong is saying the straddle rules do not apply. The two positions are absolutely offsetting and the straddle rules apply.
Read the definition of offsetting positions in Publication 550.
2007-05-04 08:15:58 · answer #1 · answered by zman492 7 · 1⤊ 0⤋
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2016-12-24 20:26:13 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Wash Sale Rule Options
2016-11-11 03:41:33 · answer #3 · answered by ? 4 · 0⤊ 0⤋
Good question. My take on it is that the securities are different so the 30-day wash sale rule does not apply. But if there is any significant tax money involved, I'd check with an expert.
Postscript: I reviewed the material cited by the previous responder; it is worth reading. But the straddle rules do not apply in your case because you are not carrying offsetting positions.
2007-05-04 08:17:04 · answer #4 · answered by Anonymous · 0⤊ 1⤋
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2014-12-18 14:09:39 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I've never actually heard of debit spreads. Can you explain what that is?
2007-05-04 08:11:55 · answer #6 · answered by Sue 4 · 0⤊ 1⤋