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Transaction1: I bought 200 QQQ ( ETF) at about $160 in Jan 2019, paying out about $32k

Transaction2: I sold two calls on QQQ ( QQQ190628C00170000 ) for expiring on June 28, 2019 for a strike price of $170 for a total receipt of about $400 on same day as Transaction1 as I was hoping that it will not rise above $170 and let the option expire.

PossibleTransactionS1AND2: Now QQQ is well above $185 so I am planning to cover the call option of Transacton2, and to cover the cost I will sell two options further for Dec 2019 ( let us say QQQ191231C00180000) .

As I will be opening the transaction on "substantially equivalent" position, where there will be a loss on QQQ190628C00170000 , so my question is , to which position's cost basis the loss should be added? to QQQ or QQQ191231C00180000 ?

I am planning to hold the QQQ, so if conditions are not again in my favor, I will roll this to June 2020 and so on.

I have a question at can closing covered call and opening a new coverd call trigger wash sale that looks similar, but does not ask the same question.

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The short call is not substantially identical to the long shares so there is no conflict there. But there is one with calls with different strikes on the same underlying.

If you take a loss your initial short call and open another short call position on the same underlying, the loss from the first option would be disallowed and added to the premium of the second option.

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@bob-baerker is correct, but also remember holding period of your stock (long share) will be affected

Whats the difference between a qualified and an unqualified covered call?

And the article titled Final Qualified Covered Call Regulations Resolve Some Issues, But Raise New Ones

  • The Non-Qualified covered call rule applies to selling in-the-money not out-of-the-money options. – Bob Baerker May 20 at 16:07

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