Replies to post #20103 on Advanced Micro Devices Inc (AMD)

[Petz]

Are you guys aware of the 60-40 rule and mark-to-market rule on profits/losses from index options?

Basically any gains/losses are counted as 60% long term, 40% short term no matter how long you held the index options.

And positions held on December 31 have to be treated as if they were sold and then repurchased on Decmeber 31.

But some index options don't qualify -- "narrow based indices"

Petz

[HailMary]

I think I'm going to avoid the IRS hassle and just hold the puts and get assigned. I think AMD will be above $17 by January, so I just need to show some patience. I normally don't put myself in a situation like this, so I'm a little out of my element. I hope the risk I am taking doesn't burn me.

HailMary

[Elmer Phud]

Sgolds -

The wash sale rules apply to a loss realized on a short sale if you sell, or enter into another short sale of, substantially identical stock or securities within a period beginning 30 days before the date the short sale is complete and ending 30 days after that date.

So, is a Jan $16 Put "substantially identical" to a April $15 Put? I believe the answer is no because of the different strike price. Had they both been at the same strike price then it might be a different story but the different date makes it a different investment as well. I admit I am no expert but this is my interpretation and that's what influences my reporting.