Losses and “Bed and Breakfast” Share Trading

[Carrolll1000]

I have sold some shares that resulted in a Loss for CGT. This loss was used to offset a CGT profit. I was intending to re-purchase the loss bearing shares in the new year and was planning to wait the 4 weeks, so that the loss on the sale is recognised. However the shares price has dropped further. I am now thinking of purchasing options now, on the same share. The options would expire a week after the required 4 weeks. I am wondering if I did this, would purchasing these options be considered being the re-purchase of the actual shares?

Thanks in advance.

 

[jpd]

No, options are a separate investment to the underlying share - depending in the type, they are inherently more risky than the share

 

[Corola]

Purchasing the options would not be seen as reacquiring the shares, but exercising the options would be.

 

[jpd]

It's almost never done to exercise the options and buy the shares

Most options are sold before the exercise date

 

[Carrolll1000]

It's almost never done to exercise the options and buy the shares

Most options are sold before the exercise date

I would be looking to exercise the options but only after the 4 weeks. I am basically wanting to lock in the price now, incase the price goes up in the mean time. If the price drops below my strike price then I won’t exercise at all.

 

[Carrolll1000]

No, options are a separate investment to the underlying share - depending in the type, they are inherently more risky than the share

What if it wasn’t options but warrants instead?

 

[Carrolll1000]

Purchasing the options would not be seen as reacquiring the shares, but exercising the options would be.

What if it wasn’t options but call warrants instead?

 

[Corola]

In neither case are you obliged to take receipt of the underlying shares so you haven't acquired the shares until the option or warrant is exercised.

If it was a forward contract, where you must take receipt of the underlying shares at the future date, I suppose it could be argued that you do continue to own the underlying stock. I don't know how Revenue would treat that case.

 

[Carrolll1000]

In neither case are you obliged to take receipt of the underlying shares so you haven't acquired the shares until the option or warrant is exercised.

If it was a forward contract, where you must take receipt of the underlying shares at the future date, I suppose it could be argued that you do continue to own the underlying stock. I don't know how Revenue would treat that case.

Thanks for your answer. Very much appreciated.