How to handle stock options that were NOT exercised and sold @ a loss?

Question

Hello everyone! Nice board and glad to be a member.

I recently purchased some options only to have sold them @ a loss. They won't expire until next year but from the looks of things they will be worthless. Now I read in a previous post, that you would just report it as a loss in schedule D. Is that correct?

Would this spreadsheet format work okay to calculate option losses?

See this link:

formatting link

This would work for stocks but I'm unsure for the options. Please advise and thank you very much!

Daniel

NoSuchPerson · Accepted Answer

This is really pretty simple. If you bought the options and sold them at a loss, then it's no different than if you bought stock and sold it at a loss. You describe them as options, you list the purchase price and date, you list the sale price and date, and from that you get the gain or loss and whether this was a long- or short-term transaction.

Things get slightly more complicated if you exercised the options, or if you held the underlying stock. Even then, it's usually relatively straightforward.

Seth · Answer

You bought a security (the option) and sold it at a loss. Just describe it correctly in the Schedule D and there should be no problems.

For options that you buy and sell, yes, they're just like any other securities that you buy and sell. Options that you exercise (or have exercised against you) are different.

Seth

dman81 · Answer

Thanks very much!  Since this is my first year doing this, I justwanted to be 110% sure.

How to handle stock options that were NOT exercised and sold @ a loss?

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