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The wash sale rule with options, in worked examples

In the US, if you sell at a loss and buy the same stock back within 30 days, before or after, you can't claim the loss yet. Options can count as buying it back. Here are four cases, worked out in numbers.

Options guide · 9-minute read · Updated 2026-10-28

The short answer

A Wash sale (options) happens when you sell a stock at a loss and buy the same stock, or something "substantially identical," within 30 days before or after the sale. That's a window of about two months around the sale.

When it applies, the loss isn't gone. It's added to the Cost basis of the new shares. You get it later, when you sell those. The time you held the old shares usually carries over too.

Options make this easy to trip. A put that's assigned buys the shares. A call you buy is a contract to buy them. Both happen all the time in the wheel strategy, often right after a loss.

As of October 2026, the IRS explains the rule in Publication 550. That's the place to check the current wording.

What counts as buying it back

The window runs both ways. Buying shares 20 days before you sell the old ones at a loss counts too.

Example 1: the wheel trap, where the stock keeps falling (hypothetical)

This is the one that catches wheel sellers. All numbers are made up.

You bought 100 shares of XYZ at $50 months ago. It slid. On October 1, you sell them at $40. That's a −$1,000 loss, and you plan to use it on this year's taxes.

On October 11, you want back in. You sell a $38 put for $1.00 and collect $100.

On October 25, XYZ is at $35. You're assigned. You just bought 100 XYZ shares at $38, 24 days after the loss sale.

Check the real money. You lost $1,000 on the first shares. On the second set, you paid $38, got $1 back, and they're worth $30: another −$700. Total: −$1,700. The rule matches it exactly. It just moved the first $1,000 onto the new shares.

So on this year's return, the $1,000 loss you counted on is $0. You can claim it only when you sell the new shares.

Say you sell them on December 31 at $30, to claim the full −$1,700 this year. Then on January 10 you sell another put, and it's assigned on January 20. That's within 30 days again. The loss moves onto the newest shares, into next year.

Keep wheeling the same stock while it falls, and the loss keeps rolling forward.

Example 2: buying a call after a loss sale (hypothetical)

You sell 100 XYZ at a −$800 loss on November 20. You still like the stock. On November 30, you buy one $40 call for $2.00, or $200, to keep the upside.

The total loss is the same −$1,000. It just shows up when the call ends, not when you sold the shares.

Example 3: closing a put at a loss, then selling it again (hypothetical)

You sold a $45 put for $1.00. XYZ dropped. You buy it back for $4.00: a −$300 loss. Five days later, you sell the same $45 put again for $4.50.

The rules are written mostly about buying. For re-selling the same option, the answer is less clear-cut. Brokers and tax preparers don't all handle it the same way. If you plan to claim that −$300, ask a tax professional first, or wait out the 30 days.

Example 4: the IRA trap (hypothetical)

You sell 100 XYZ in your taxable account at a −$1,000 loss. Twelve days later, a put you sold in your IRA is assigned. You now own XYZ inside the IRA.

In a normal wash sale, the loss waits on the new shares. Inside an IRA, gains and losses aren't counted each year. So the loss may never be usable. Treat your IRA and your taxable account as one when you watch the 30 days.

How to keep it from biting

1. Write down every loss sale with its date. Mark the day 31 days later on a calendar.
2. Don't sell a put on that stock inside the window if you need the loss this year.
3. Watch all your accounts. Brokers track wash sales inside one account. They usually can't see your IRA at another broker, or your spouse's account.
4. Watch December closely. A loss sale late in the year plus a January put can push the loss into next year.
5. Wheel a different company for a month. A different stock isn't "substantially identical."

Want to run your own numbers? Try the wash sale calculator. Want the bigger tax picture first? See taxes on selling options in the US.

If you're in Canada

Canada has its own version, the Superficial loss rule, also with a 30-day window each way. We work through it with options in the superficial loss rule with options. In a TFSA or RRSP, losses can't be claimed at all, and which option trades a TFSA or RRSP allows differs by broker.

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