Does the Wash Sale Rule Apply to Options Trading in the Same Way as Stock Trading?
Yes, the wash sale rule applies to options trading, generally in the same way as stock trading. The rule disallows a loss on the sale of a security if a substantially identical security is purchased within 30 days before or after the sale.
For options, buying or selling an option that is considered substantially identical to the underlying asset or to another option can trigger the rule. This is a complex area, often depending on the option's strike price and expiration date.
Glossar
Wash Sale
Mechanism ⎊ A wash sale, within cryptocurrency, options, and derivatives, represents the disallowance of a tax loss when substantially identical securities are repurchased within a 30-day window before or after the sale.
Wash Sale Rule
Constraint ⎊ The Wash Sale Rule, within cryptocurrency, options, and derivatives trading, disallows claiming a tax loss on a sale if a substantially identical asset is purchased within a 30-day period before or after the sale date, effectively preventing artificial loss harvesting.