Wash sale rule Explanation- Am I understanding this right?


I made a lot of trades in 2024, I was up 50k at one point and then gave back almost all the profit and I am only up around 4k currently for 2024. I am assuming I only have to pay capital gains taxes on 4k profit for the year, not 50k or some figure more than my overall gains of 4k because of wash sale rule. I did lot of day trading and buying same stock within 30 days of selling and I wanted to understand the implications of wash sale rule. I currently have sold all my positions and do not hold any stock/options and I am up 4k on the year.

Example 1: I bought NVDA calls on August 14, sold on August 15 for gains of 5k. Then I bought NVDA calls on August 20 and sold on August 25 for loss of 3k. I did this several times with NVDA stock and options and have profit of 20k from NVDA and loss of 19k with overall net gain of around 1k on NVDA. I am trying to understand wash sale rule and my understanding is I only have to pay capital gains taxes for 1k on NVDA. My cost basis on my second purchase gets adjusted from profit on first purchase and my cost basis for third purchase gets adjusted based on profit/loss from second sell and so on for future purchase. Is this correct statement? Also, I currently do not hold any NVDA stocks or options, I sold them all.

Example 2: I did same thing with AMZN stock too. I bought calls, sold for some loss, bought more calls within 30 days and sold for some profit and rinse and repeat. I did this multiple times throughout the year.

I traded mostly tech stocks and at one point was in profit in excess of 50k. However I did not sell at the top and the stocks came crashing down and I lost all my profit. At one point I lost all profit and was 20k down on my cost basis too. I was able to recover my loss and I am up 4k in the year. I am now thinking about my Uncle sam and how much does he want for 2024. With no current positions in any stock/options currently, my thinking is just taxes on 4k profit. Let me know if I am wrong or if there is something that I am overlooking and if I need to put more money away for my taxes.


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