In Jan 2019, I bought 200 QQQ (ETF) at about $160 and also wrote two covered calls for June 2019 at 170 (higher than the last day price) netting a small premium. Now QQQ is at about 185 so it will be assigned to me unless I cover it.
I am thinking to cover the existing call of $170 and simultaneously write another call at $180 for Dec 2019 so I get few cents of immediate profit without giving any further cash or stock.
My main question is, will these two transactions together will trigger a wash sale?
What happens to holding period (as new covered call will be at lower than the last day price)? I plan to hold the position so I pay long term capital gain
I looked Can buying covered calls to close trigger a wash sale and Are two options ever too similar for taxes? but did not relate it with above situation .
Some other links to consider are https://www.elitetrader.com/et/threads/wash-sale-rule-for-options.26435/ https://greentradertax.com/tax-treatment-for-trading-options/ https://en.wikipedia.org/wiki/Mean_reversion_(finance)
I liked the idea from @bob-baerker
Here's an out of the box suggestion. Covered calls and short puts are synthetically equal. The Jun $170 CC is equal to a Jun $170 put. Buy the Jun $170 put to offset your position and sell the Dec $180 put to open (execute as diagonal spread). Run the numbers to see how close they are. Comes June, if CC is assigned, no wash sale. If not, long put locks in CC position (no loss). Post assignment, make sure to account for interest earned on QQQ proceeds as well as modest dividend lost. I don't know if this runs afoul of tax law and even if so, will they pick it up?