hyten1

Eric I am not sure why the author mention the 31 days, I don’t think you need that, maybe contact author for clarification or someone else my understanding is that, the asymmetry factor applies, and that is all you need in this case: sell stock -> buy call (wash sale) sell option (you own calls) -> buy stock (no wash sale) It seems where you take the lost determines if wash sale rules applies or not. Selling option at a lost is different than selling the stock at a lost. this is my current understanding, correct me if I am wrong or missing something

one page 4 the author acknowledge the problem that we currently have, option to equity doesn't trigger wash sale, page 4. Fortunately, current law already comes to the right answer in some cases. Most importantly, it finds a wash sale when stock is replaced with a call option. Commentators generally attack this result as overbroad, since options are economically different from stock. In response, this Article defends this widely criticized rule, showing that it is appropriate in light of our system’s generous treatment of gains. Of course, other aspects of current law do not conform to the “call spread” theory. In response, this Article recommends specific changes (or at least clarifications) of current law. For instance, a wash sale should be triggered when stock replaces a call option, when a put option replaces a short sale... on page 27 note 63, There is an asymmetry in applying the “substantially identical” test to stock and options. According to Rev. Rul. 56-406, sorry eric, this is all have, if you find anything more let me know

haha, agree. the paper somewhat addresses why wash sale rules exist in the first place, and why your above senarios doesn't also even if I am interesting in skating right up to the edge, the thought of having to file this manually to counter what td or fidelity sends to the IRS gives me a headache (I am assuming td/fidelity won't match up the equity with the option trade unless I am wrong)

yeah I agree, this is why I won't be doing this anytime soon, also back to the spirit of the law. I am sure some hedge funds are skating right up to the the edge, the CFO friend I know, he doesn't do it, but he knows many who does, he has also been offer this advice from various lawyers that he has encounter throughout his career. i don't know how tdamertriade, fidelity, etc. handle this in their system, if they don't match up the right transaction you won't be circumventing wash sale via what they send to the IRS EDIT: also if you are interested I think the rest of the paper might provide some clue as to why equity to option is consider a wash sale but option to equity is not.

eric, i see, my point is that the law is not clear, if the following is true, Buying a call after within 30 days of selling a stock at a loss will trigger a wash sale, however, having a call and expiring/selling at a loss and then buying a stock will not create a wash sale. you would think otherwise!!! but apparently it is. i spoke to the CFO again, he said this is a well known way people get around the rules. I am not a lawyer so I am not sophisticated enough to read up all the laws and figure out why this is the case. on another note, just because a sophisticated investors does it doesn't mean it'll be easy for us, given most of us trade via Fidelity, Tdameritrade etc. not sure how their system handles these situations (will they match the sell of stock with the corresponding buy of OTM calls?) if their system doesn't handle it automatically you'll have to deal with it manually via tax filing which can be a pain in the ass. And I highly doubt my current tax account know about this.

ERIC you are right, the law seemingly contridict itself, this is what someone told me from a CFO level guy at a hedge fund Buying a call after within 30 days of selling a stock at a loss will trigger a wash sale, however, having a call and expiring/selling at a loss and then buying a stock will not create a wash sale. you would think it should work both ways, but apparently it doesn't! I obviously have never tried this

here is a good paper on the topic especially the section "III. Perfect End-Runs Around the Wash Sale Regime" https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=3484&context=faculty_scholarship there is definitely ambiquitiy within the law, thats why these so call loophole/workaround exist you can either stick to the spirit of the law or attempt/apply these loopholes, thats what the discussion in this thread comes down to

flu kills 10k to 50k people per year, so on the low end flu kills less than 1k per month and at the high end it kills 4k per month (this is with vaccine). so most likely without vaccine it would be more, how much more? covid19 has kill so far 11k people across US for almost a month worth of time. you can argue it could be more due to the timing and as well the effect of stay a home (flu has no stay at home). so covid19 is 10x to 2x worst than the flu (given flu has vaccine and covid19 has stay at home)

game changer, we need this https://www.surescreen.com/products/covid-19-coronavirus-rapid-test-cassette

does anyone have any gdp data either from south korea /japan/taiwan, we can include china if we can believe it. I would like to see what is the total hit to gdp thus far and in total for 2020 (forecast). I assume this gives us some idea how much of a gdp hit will US experience and we can then extrapolate how much of a hit to the stock market so to get an idea will this be a 30% peak to through or a 50% peak to trough market downturn before its near a bottom? or will this be worst than that?

lets hope remdesivir works

interesting facts (people will say chinas data are not trustworthy, maybe), beijing has 8 death, shanghai has 3 deaths so far (3/2/2020 10pm), these are 2 mega city with population of over 20 million people each. not saying we have nothing to worry about, the outcome obviously depends on how the situation is handle by the authorities etc., nothing is guarantee or a given. EDIT: either you don't believe anything out of china, or this is an illustration of what can happen if the authorities act quickly etc. EDIT 2: if you don't believe data from china, there is taiwan, japan to look at, both have large cities (obviously outcomes is highly dependent on how the local authorities handle the situation).

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

here are some good info, if you can read it https://www.nytimes.com/interactive/2020/world/asia/china-coronavirus-contain.html?action=click&module=Top%20Stories&pgtype=Homepage?utm_source=digg

in the the days of social media any tiny bit of (miss)information can be spread throughout the entire population in an instance especially when fear is involve. just look at NYC today, a rumor of first case in queens was supposedly reported (spread like wildfire on social media), however it has been denied by the officials. now some will say, "oh the officials are covering it up", but we have to be calm, take a deep breadth, take precaution, but lets not create a panic and create more issue than it really out to be. https://www.forbes.com/sites/sergeiklebnikov/2020/01/31/nyc-officials-deny-report-of-coronavirus-amid-confusion/#66c78e01652c some will argue official are banning people from talking about this on wechat, look the big government is at it again, a cover up, but lets take everything with grain of salt. there are good reason why this might of been done (we don't really know if it censorship or good common sense). panic can be spread very very quickly in days of iphones, social media. EDIT: my mom was at a supermarket today (regular american supermarket) while she was leaving the checkout counter, she cough (she is 80 an old chinese lady), she barely had a chance to raise her arm up to cover her mouth (she was holding 2 bags of things she bought from the supermarket). The cash out counter lady yelled at her and said, cover your month when you cough. Now this could just be normal behavior (anytime you cough you should cover your mouth), but then again this has never happen to her before, you can't but wonder why.