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Can I sell my stock today at a loss for this calendar year and simultaneously buy a call option that allows me to participate in any upward movement in the stock I just sold?

April 26, 2017allows buy calendar call option loss sell simultaneously stock today year

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Can I sell my stock today at a loss for this calendar year and simultaneously buy a call option that allows me to participate in any upward movement in the stock I just sold?

1 Answer

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10 Posted

This particular strategy may be a violation of the “wash-sale” rule. The wash-sale rule prevents taxpayers who are not dealers from selling stock or securities (including options) at a loss and reacquiring “substantially identical” stock or securities (or options to acquire substantially identical stock or securities) within a 30-day period before or after the loss. We recommend that you contact your broker or tax advisor for guidance. For more information on wash-sale rules and other tax-related matters please refer to our online “Taxes & Investing – A Guide for the Individual Investor” brochure (PDF) or call 1-888-OPTIONS (678-4667) for a printed version of this free guide.