Wiki Selling TSLA Options - Be the House

[mickle]

One more assigned/wash sale question....

If I ended up with "disallowed" losses (called that in Fidelity) due to being assigned a few times and selling the shares again... is the only way out of it to completely sell off all my TSLA shares? If I kept just a few would that keep me from claiming those losses? And then I can buy shares again for 30 days? Or if Fidelity says disallowed is that loss gone forever and not recoverable? Need to know asap in case I need to sell remaining share this week! thanks

 

[mongo]

One more assigned/wash sale question....

If I ended up with "disallowed" losses (called that in Fidelity) due to being assigned a few times and selling the shares again... is the only way out of it to completely sell off all my TSLA shares? If I kept just a few would that keep me from claiming those losses? And then I can buy shares again for 30 days? Or if Fidelity says disallowed is that loss gone forever and not recoverable? Need to know asap in case I need to sell remaining share this week! thanks

Non-authoritative non-advice
Wash sales in a taxable account are not gone forever, the basis of the bought shares is adjusted to account for the loss.
Buy at 200, sell at 150: 50 loss
Buy at 100, basis is 150 (100 + 50) on those new shares.
Also it tracks 1:1 , if you sold 65 shares and bought back 25, only those 25 would have the adjusted basis and you would get to claim the loss from the other 40.

 

[MP3Mike]

Non-authoritative non-advice
Wash sales in a taxable account are not gone forever, the basis of the bought shares is adjusted to account for the loss.

Unless you bought matching securities in a non-taxable account during the 61 day window. At that point the loss is gone forever.

 

[mongo]

Unless you bought matching securities in a non-taxable account during the 61 day window. At that point the loss is gone forever.

That's what I was trying to qualify by "Wash sales in a taxable account". They already had the washes/ disallowed per Fidelity.

Good to mention it explicitly though (if those were the only purchases)

 

[OrthoSurg]

Can’t believe

I am still trying to get a handle on these wash sale rules with respect to assignment and fear I've lost some deductions already.

Wondering if after you've been assigned and sold off shares, can you then buy calls or sell covered calls for the next 30 days or not? Would that be an issue for either of them? Or is it different if you buy a call for >30 days out?

He told me I could sell my TSLA shares and buy call options to avoir the wash sale rule. Didn’t seem to be an issue if the call is >30 days out.

My problem was staying out of the stock completely for 30 days when I expect a sharp recovery in the near term before going to retest the lows again

 

[mickle]

Non-authoritative non-advice
Wash sales in a taxable account are not gone forever, the basis of the bought shares is adjusted to account for the loss.
Buy at 200, sell at 150: 50 loss
Buy at 100, basis is 150 (100 + 50) on those new shares.
Also it tracks 1:1 , if you sold 65 shares and bought back 25, only those 25 would have the adjusted basis and you would get to claim the loss from the other 40.

OK I think that helps. Maybe an example to confirm my situation...

If I sold off 5000 shares at a loss a few days ago those would maybe have initially been marked unrealized loss.
Then I get assigned 1000 shares on a put a day later, so now the loss from 1000 of my 5000 shares gets added to the basis on the assigned shares?
(and the remaining original 4000 shares stay with the original unrealized loss).
And then if I sell off those 1000 assigned shares, and don't buy again for 30 days, I get to claim the rest of the loss?

 

[OrthoSurg]

Did he say to roll 6 months before expiry at then current ATM?

Yes that’s what he was suggesting to avoid my margin power disappearing suddenly.



Still can’t believe I had to sell all my shares and convert to LEAPS to avoid over 500k in taxes to pay. I was looking for the good reason to convert shares to LEAPS and got offered the best reason ever.

 

[mongo]

OK I think that helps. Maybe an example to confirm my situation...

If I sold off 5000 shares at a loss a few days ago those would maybe have initially been marked unrealized loss.
Then I get assigned 1000 shares on a put a day later, so now the loss from 1000 of my 5000 shares gets added to the basis on the assigned shares?
(and the remaining original 4000 shares stay with the original unrealized loss).
And then if I sell off those 1000 assigned shares, and don't buy again for 30 days, I get to claim the rest of the loss?

That is my understanding.
(Though the 5000 would initially be characterized as a realized loss, but not completely locked in until 30 days later.)

 

[kabin]

Can’t believe

He told me I could sell my TSLA shares and buy call options to avoir the wash sale rule. Didn’t seem to be an issue if the call is >30 days out.

My problem was staying out of the stock completely for 30 days when I expect a sharp recovery in the near term before going to retest the lows again

Interesting you guys up north are hampered by the wash-sale rule too.

Anyway, that's a good question. This rule leaves much to interpretation. Here's a quote/link from a NASDAQ link regarding ways to avoid wash-sale rule:

"However, the government states that the sale of an equity and the purchase of a call option on that equity does actually trigger a wash sale. Ironically selling a call for a loss and then buying the underlying stock does not."

https://www.nasdaq.com/articles/strategies-help-clients-around-wash-sale-rule-2015-11-10

 

[MikeC]

Unless you bought matching securities in a non-taxable account during the 61 day window. At that point the loss is gone forever.

What if you did buy a matching security in a non-taxable account, but you then take the wash in the taxable account by also buying back the same position in that account as well. Would that prevent the irreversible loss?

 

[CHGolferJim]

Yes that’s what he was suggesting to avoid my margin power disappearing suddenly.



Still can’t believe I had to sell all my shares and convert to LEAPS to avoid over 500k in taxes to pay. I was looking for the good reason to convert shares to LEAPS and got offered the best reason ever.

You’re due some good news, hope it works out. If I were you, I’d get confirmation from a CPA.

 

[Yoona]

TSLA is today's #1 in Nasdaq 100 and #2 in S&P 500

 

[kabin]

Apparently, adding one step to the sell stock at a loss, buy a call sequence avoids the wash sale rule:

But this penalty can be turned around and used to a client’s benefit.

A partner at Deloitte suggested to us a three-step process to take a loss while not substantially disturbing alpha.

• Step 1: Sell XYZ for a $15 loss.
• Step 2: Buy the call option for $3.
• Step 3: Buy back the stock.

 

[mongo]

What if you did buy a matching security in a non-taxable account, but you then take the wash in the taxable account by also buying back the same position in that account as well. Would that prevent the irreversible loss?

That 'should', especially if they are at different brokerages.

 

[mickle]

Yes that’s what he was suggesting to avoid my margin power disappearing suddenly.



Still can’t believe I had to sell all my shares and convert to LEAPS to avoid over 500k in taxes to pay. I was looking for the good reason to convert shares to LEAPS and got offered the best reason ever.

Yes, I just had a good talk with my accountant and decided that to make sure I don't have a giant tax bill I need to completely sell off all my shares and close all my BPS. Otherwise the risk of assignment in January would move the loss to 2023 or beyond and screw me over. So looks like I'm out for a month.

It seems like during that out time, you could do something like buy into Direxion Daily TSLA Bull 1.5X Shares (TSLL) if you expected a rally day you didn't want to miss out on.

 

[BornToFly]

Stocks don't go straight up or straight down. TSLA probably did the best ever to break that rule for a company that is not only NOT going bankrupt, but growing close to 50%/year. So I have NO idea if today's little pop was just a dead cat bounce, or the start of a face ripping rally. Hopefully the tax loss harvesting is done, and Q4 P&D early next week doesn't push TSLA lower again.

I'm still trying to figure out how I can replace the 2/3 share loss I suffered this year. I think the only way would be to take on a lot of new risk/leverage with OTM LEAP Calls, or Bull call spreads. If they don't work out, I would lose everything, so I just can't do it. I have to accept that I will never own a private jet again (but it was one hell of a year when I did).

 

[OrthoSurg]

Stocks don't go straight up or straight down. TSLA probably did the best ever to break that rule for a company that is not only NOT going bankrupt, but growing close to 50%/year. So I have NO idea if today's little pop was just a dead cat bounce, or the start of a face ripping rally. Hopefully the tax loss harvesting is done, and Q4 P&D early next week doesn't push TSLA lower again.

I'm still trying to figure out how I can replace the 2/3 share loss I suffered this year. I think the only way would be to take on a lot of new risk/leverage with OTM LEAP Calls, or Bull call spreads. If they don't work out, I would lose everything, so I just can't do it. I have to accept that I will never own a private jet again (but it was one hell of a year when I did).

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I almost selected strike price of 600 for my Jan25 LEAPS and do 10x contracts. However I decided to keep my road bicycle and do triathlons and forgot the idea of taking my flying classes. I am going to have a lower environmental impact this way too. Hope you enjoyed it and have nice stories to tell your kids dans grandkids.

 

[Oil4AsphaultOnly]

Apparently, adding one step to the sell stock at a loss, buy a call sequence avoids the wash sale rule:

Are those ATM call options or ITM? The concern with TSLA is that ATM call premiums have pretty high extrinsic value, especially for 30 days out. Otherwise, if you exercise the call option within 30-days, doesn't that still count as "acquiring shares", which should fall within the scope of the wash sale rule?

 

[EVNow]

Fidelity has been giving these messages. I wonder whether any of these affect buying calls and not have washout sales. Will have to dig further.

Important dates for 2022 year end​

​

The last day to sell long stock and option positions for tax year 2022 will be Friday, December 30th.​

​

Short stock and short option positions generally use settlement date on closing trades instead of trade date for tax purposes.​

​

The last day to buy to cover short stock positions for tax year 2022 will be Wednesday, December 28th.​

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The last day to buy to close short option positions for tax year 2022 will be Thursday, December 29th.​

 

[Yoona]

https://twitter.com/x/status/1608289198674518023

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