Message Font: Serif | Sans-Serif
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 123501  
Subject: Re: Tax Treatment of Option Roll Date: 12/20/2013 4:57 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
The problem you're up against is one with no black and white answer. As you are probably aware, wash sale rules apply when you sell a security at a loss and replace it with a substantially identical security.

Generally, options with one expiration date are typically NOT substantially identical with options having a different expiration. However, because options that are deep in the money behave much more like their underlying stock than options roughly at the money or out of the money, there is some question about these in the money options becoming substantially identical to other options despite differing strike prices or expiration dates.

I don't know of any definitive authority which is on this point.

If you are concerned about wash sale issues, your best bet is to avoid the wash sale in some other way. You could sell the losing option and wait 31 days before buying the replacement. You could buy the replacement and then wait 31 days before selling the losing position. You could use a different (but somewhat similar) underlying stock. (For example, selling your option on Exxon-Mobil and buying an option on BP.)

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Foolanthropy 2015!
Fistula Foundation: A World of Good!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Saul's Investing Discussions

Gilead Sciences CC Thoughts
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.