Until this point, have I created a wash sale for any of my losses? I don't believe I have, since I haven't bought shares back after selling them at a loss, but correct me if I'm wrong.
I agree with you
Follow-up question: If I buy put contracts of the same company with an expiration inside 30 days, would that trigger a wash sale in any of the above losses? I tried reading the rules of wash sale on straddle position but couldn't wrap my head around the entire scenario. The reason I want to know this is because if I won't create a wash sale, I'd like to buy puts. My brokerage guy says I won't trigger a wash sale, but I wanted some reaffirmation on it.
If I buy put contracts of the same company with an expiration inside 30 days, would that trigger a wash sale? if it was the same strike price and expiration date it is likely you have purchased an identical security which the IRS would deem a wash sale, but see more below
one definition of a straddle
you buy a call option and a put option on the same underlying asset. Both options have the same expiration date and the same strike price, creating two contracts centered on the same point. If the asset’s price rises by the expiration date, you can make money off your call option. If the asset’s price falls by the expiration date, you can make money off your put option.
a covered straddle
position is created by buying (or owning) stock and selling both an at-the-money call and an at-the-money put. The call and put have the same strike price and same expiration date.
what is a wash sale for option purposes?
Losses on Options
you can have a wash sale when you close an option position at a loss, if you establish a replacement position within the wash sale period. The Treasury has yet to issue regulations (for IRC section 1091) under this rule which means there is a lot of uncertainty of when there is a wash sale. Foremost among these is the question of when one option is substantially identical to another option.
Until the Treasury decides to issue regulations or other guidance, no one can say exactly how the wash sale rule applies to losses on options. But there’s a pretty good rule of thumb that should tell you when you’re safe and when you’re on thin ice. If the positions you acquired within the wash sale period permit you to participate in the same up and down market swings as the position that produced the loss, there’s a chance the IRS will say you have a wash sale. If that’s not the case, you should be safe.
