# Are options with different strike and/or expiry considered identical by CRA?



## medalik (Dec 30, 2015)

Hi,

I trade stock options exclusively and am trying to avoid superficial loss. If anybody can help answer this question then I would be very thankful!

Scenario: 
- Day d: close a call options position with a loss. The option is for stock XYZ and the strike price is $10
- Day d+1: open a new call options position for the same stock XYZ, but this time with a strike price of $11
- Day d+31: the position I opened on day d+1 is still open

In this scenario, would I have a superficial loss for the transaction on day d? 

What if the position I opened on day d+1 was for the same strike price but different expiry date? Would I have a superficial loss in this case as well?

This basically comes down to answer whether the CRA considers options with the different strike and/or expiry to be identical investments.

Many thanks!!


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## avrex (Nov 14, 2010)

*This is a great question!*

I have often wondered about this myself..... but I don't have an answer.
The CRA doesn't have an answer either. 

In general, I've noticed that the CRA hardly ever refers to or discusses *equity options* in their 'interpretation bulletin' documents.

Let's take a stab here and have a look at the Identical Properties document.

Of course, equity options are not mentioned anywhere in this document.
The closest security, that perhaps an equity option might act like (i.e. taxed in the same way) ..... might be the ...... commodity futures contract.

Here it states,
Commodity Futures Contracts
¶ 8. Commodity futures contracts which grant to the holder thereof the same rights are considered to be identical. 
That is, futures contracts for the same standard amount of the same commodity for delivery in the same month are considered to be identical.

So in this case, if they have different delivery months, they are not considered identical.

If we extend this thinking to equity options..... even if we have the same underlying.... as long as the expiry date is different..... they are not identical.

On a personal note, I hope my reasoning above is true, because I'm constantly rolling options (and I'm sure some of my options have fallen into superficial loss territory).


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## humble_pie (Jun 7, 2009)

evidently a significant criterion is whether 2 items have different CUSIP numbers. Options - all series & classes - do have different CUSIP numbers.

when i sell shares for tax losses but would still like, long-term, to hold a position in a company, i usually bridge the 30-day wash period by buying a call in a different company. Thus i've sold some energy shares for losses, but i've bought long-term calls in ECA & XEG. 

some people advocate bridging wash periods with different shares. That is, one sells company ABC but buys similar company DEF, in order to hedge against any sudden increase in ABC during the wash period. This is how the Mawer tax-advantage balanced fund operates. Sometime after the 30-day wash ends, Mawer is likely to dump DEF & buy back its original position in ABC, assuming that it still likes ABC.

but i ask myself, Why pop the money to buy entire shares as a bridge, just buy a bunch of less-expensive calls.


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## medalik (Dec 30, 2015)

Thanks all for sharing your thoughts!

I know I asked the question a bit late as I've already done lots of options trading for the first time this year. Like avrex, I might be in superficial loss territory for a number of trades I've done. We'll see what happens after filing with CRA for the year.

By the way, I asked the same question in http://www.adjustedcostbase.ca and got a positive answer from the site's team, that options with different strikes/expiries do not trigger superficial loss (see post by medalik, December 28, 2015 at 12:09 am):

http://www.adjustedcostbase.ca/blog/what-is-the-superficial-loss-rule/#comment-121859


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## tr81icr (Apr 9, 2021)

medalik said:


> Hi,
> 
> I trade stock options exclusively and am trying to avoid superficial loss. If anybody can help answer this question then I would be very thankful!


If you're actively trading (day/swing/etc), you should be reporting the gains/loss on account of income, in which case superficial losses don't apply. IT-459 & IT-479R


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