Can the Wash Sale Rule Be Triggered by Trading Different Strike Prices of the Same Option?
Yes, it can be triggered. While options with different strike prices are generally not "substantially identical," if the difference in strike price is minor, or if the option is deep in-the-money, the IRS could argue they are substantially identical.
The determination is based on facts and circumstances, but to be safe, traders should assume options with similar terms may trigger the rule.
