topic Bought Put Option and sold at a loss wash sale rule in Investors & landlords

Bought Put Option and sold at a loss wash sale rule

Stugi — Mon, 09 Mar 2026 05:39:58 GMT

Hello,

I have a question regarding the wash sale rule. I bought 4 put options to open on 30 July 2021. I sold these put options to close on 16 Aug 2021 at a loss. I am being told by my brokerage that this is a wash sale since these transactions were done within 30 days.

The IRS states:

"Wash Sales
You cannot deduct losses from sales or trades of stock or securities in a wash sale unless the loss was incurred in the ordinary course of your business as a dealer in stock or securities.

A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:

Buy substantially identical stock or securities,
Acquire substantially identical stock or securities in a fully taxable trade,
Acquire a contract or option to buy substantially identical stock or securities, or
Acquire substantially identical stock for your individual retirement arrangement (IRA) or Roth IRA."

To clarify, I did not have any other instances of buying this position +/- 30 days except the position that i initially bought in the first place (4 put options to open on 30 July 2021). This is considered a wash sale? Every option bought and then sold under 30 days at a loss is automatically considered a wash sale?

Re: Bought Put Option and sold at a loss wash sale rule

Rick19744 — Sat, 19 Feb 2022 01:00:39 GMT

This is an area that is very fact oriented.

We have no idea what else you have in your portfolio; which your brokerage firm does.

You need to work through this with your brokerage firm and have them explain, based on their knowledge of your portfolio, why this falls within the wash sale rules.

Its not that you never get this loss, it is just added to the basis of "substantially identical" stock which your brokerage firm should explain to you as well.

Re: Bought Put Option and sold at a loss wash sale rule

Stugi — Sat, 19 Feb 2022 01:22:31 GMT

C on the unknown, but as I stated earlier, I do not have other trades for the time period on any account +/- 30 days or anywhere else. The brokerage told me it was because the put options buy to open and then sold to close was executed within 30 days. Here is what I was told by their part:

"A wash sale occurs when you:

sell or trade securities at a loss and

within 30 days before or after the sale, buy a substantially similar security, including acquiring a contract or option to buy substantially identical securities.

Since the contracts were opened within 30 days before the date they were closed for a loss, the transaction is categorized as a wash sale."

Confusing as I didn't buy any new options after this, so I have nothing to add the cost basis to. Nothing new at all. By the way it is worded, makes it seem that If I buy 4 put options of X to open and then sell 4 contracts of X to close at a loss, then its automatically a wash sale because its within 30 days, even though there is no record of any identical or similar security being bought anywhere else.

Re: Bought Put Option and sold at a loss wash sale rule

fanfare — Sat, 19 Feb 2022 23:25:15 GMT

options are covered by the same wash sale rules as stocks.

a wash sale occurs when a separate triggering BUY order is completed within the +/- thirty-day window.