Yes but it's the strategy that's important not the accounting. From what I read if you buy an equity, contract or option within 31 days prior or after selling the same position for a loss, that first loss is not reportable nor can you offset a gain with it. The wash transaction completely voids the prior transaction for tax purposes. Now the loss is not permanently lost, the amount of the first loss is added to the cost basis of the second transaction. Kind of carrying the loss forward. That was all news to me.
yeah i was going to say...on short term holdings it shouldnt matter. You arent bridging 2 tax scenarios anyway so its like getting writing off a loss against a gain no matter how many times you trade.
now that they are required by IRS tax policy to add all this shiz up on your 1099....you dont have to think anymore.
Never mind. I just read that the wash sale actually voids the loss on the first transaction. The loss on the first transaction is added to the cost basis of the second transaction so the loss is preserved and carried over to the second transaction but it can't be claimed on the first transaction.
So what happens with a short term wash sale? The first trade becomes short term? So what? It was short term anyway. It's not against the law to repurchase the same equity within 30 day it just disqualifies a long term gain or loss and makes it short term. If it was short term in the first place I don't think it applies.
What is a 30 day wash rule on short term trades? I understand the rule for disqualifying long term capital gains by buying or selling similar equity within 30 days. But it seems you're only trading near term options which would be short term for capital gains and loses. I'm not aware of any wash rule limitations on short term capital gains or losses.
Write this down. No one else will tell you this--but Jesse Livermore said it a long time ago. From 80 go up in 6 point increments. Pay attention to the half way points. Check out CAT at highs and lows. it has also been said that a stock once over 100 should not go back under 100. Cat did. I don't know the future--but I am watching Cat from that perspective. Trade well!
These boards are so much fun. I gotta be on both sides of the trade.
I should have played CAT long at $101, but I didn't think the bounce would take it past the mean of it's BB ($105), but I was wrong and missed a nice move up, I bought puts on the 1st pop, so I was too early and in the red till today. I really won't make that much on CAT since I was too early and held. I could have taken a ST loss, and come back in, but I would have had to go out to July puts (much more expensive) to satisfy the 30-day wash rule on losses.
It's working out, but I used my remaining cash to buy puts on other positions (i.e. on weaker 2nd tier stocks).
May is usually one crappy month to be long. Who's for playing a bounce in to May?