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I have a call option that will expire as worthless in January but I'd like to sell it now and realize the loss this year to lower this year's capital gains taxes.

I would be happy to dump it at $0.00 but I'm not sure if that is possible.

Is it possible to sell now somehow at $0.00 or perhaps I have another equivalent alternative?

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The market maker will always take it off your hands. Just enter a market sell order. It will cost you a commission to pull the loss into this year. But that's it.

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  • I just tried selling it at 0 and the order just sat there. Any suggestions? – Jonathan Nov 28 '14 at 18:27
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    Don't use a limit order, just "sell at market." – JTP - Apologise to Monica Nov 28 '14 at 18:49
  • I am optionshouse and selling at market returns an error that price can't be $0.00. I spoke with customer support and they say there is nothing to do. Perhaps you have a suggestion how to book the loss this year? – Jonathan Dec 26 '14 at 15:55
  • i just tried this with no luck. i placed a market sell order for some worthless put options and the order never filled. it was a day order at interactive brokers and i specified cboe2 instead of smart routing. – james turner Dec 24 '18 at 16:05
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    You cannot sell an option for $0.00. Therefore, a limit order is needed and the lowest price that you can bid is one cent. There is no incentive whatsoever for anyone to buy a worthless option from you for one cent so Houston, we have a problem. The only way to exit is to trade a spread that involves this worthless option and then immediately BTC the newly opened leg. – Bob Baerker Jun 23 at 14:12
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Sounds like an illiquid option, if there are actually some bidders, market makers, then sell the option at market price (market sell order). If there are not market makers then place a really low limit sell order so that you can sit at the ask in the order book. A lot of time there is off-book liquidity, so there may be a party looking for buy liquidity.

You can also exercise the option to book the loss (immediately selling the shares when they get delivered to you), if this is an American style option. But if the option is worthless then it is probably significantly underwater, and you'd end up losing a lot more as you'd buy the stock at the strike price but only be able to sell at its current market value. The loss could also be increased further if there are even MORE liquidity issues in the stock.

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If your calls expire before the end of the year, just leave them be and they will expire. If they expire in the following year, you have a problem. Each day, you can try to sell them for a penny but the odds are slim that anyone is going to buy your worthless calls.

There is a way to get rid of them but it's going to cost you modestly. Find another call that is liquid and has a narrow bid/ask spread (the higher the strike price, the better). Execute a vertical spread order and then close the new leg. For example:

XYZ is $50. You own the Jan $60 call quoted at $0.00 x 0.05 . The Jan $50 call is $1.00 x 1.05. Place a combo order to buy the Jan $50/$60 vertical call spread for $1.05. If necessary bid $1.06 or $1.07, etc. If filled, you'll have sold your calls and bought the Jan $50 call.

Before placing the above order, open a ticket to sell the soon to be purchased Jan $50 calls. The moment you get a fill on the spread order, execute the second sell-to-close order at the market. All of this assumes that you get immediate execution notification. You'll have to monitor the position because you need to STC ASAP otherwise you'll add some market risk to the equation.

The cost to you will hopefully be no more than the B/A spread and if you're still paying commissions, three of them.

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