So I took some losses on AMD last few weeks. I decided to get out of my shares and harvest my losses. Problem is, I still want to be invested in AMD, especially at these prices. So I purchased some 2026 Sept 210C options.
My broker couldn’t confirm if it was considered a wash sale. They said it’s up to the IRS but I’m confused. I thought the broker had to classify the sale.
Any idea on if selling my shares and purchasing long term ~15$ out of the money calls on the same stock is considered a wash sale?
Posted by itsprodiggi
4 Comments
Guidance is not exactly the same. If you are risking time value and intrinsic, that’s not the same. OTM definitely not the same.
NFA.
Been in that spot. IRS rules are intentionally vague. they want you to sweat it. brokers only flag obvious wash sales (identical securities within 30 days). your move might slide since OTM long-dated calls arent substantially identical, but no guarantees.
heres how i handle these:
1. track all potential wash sales yourself in a spreadsheet
2. keep positions open at least 31 days if youre unsure
3. assume the IRS will challenge it. only take the loss if youre ready to defend it
the systems designed to keep you guessing. play the long game.
Not a chance.
it depends. and its vague on purpose. if anything, its best to consult an account/lawyer that specializes in Options.
to give you an idea, as per IRS pub550
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:
1. Buy substantially identical stock or securities,
2. Acquire substantially identical stock or securities in a fully taxable trade,
3. Acquire a contract or option to buy substantially identical stock or securities, or
4. Acquire substantially identical stock for your individual retirement arrangement (IRA) or Roth IRA
The argument can be made that your situation applies to point 3. but even moreso can be made because you bought a LEAPS.
99% of us, including me, cannot answer this question with 100% confidence.