What Constitutes “Substantially Identical” in the Context of Options and the Wash Sale Rule?

Securities are "substantially identical" if they are the same in all material respects, or if the option is on the underlying security and the option's terms are very similar to the security sold at a loss. For options, purchasing an option with a very similar strike price and expiration date, or purchasing the underlying stock after selling a call option at a loss, can trigger the rule.