: Selling options to myself... which law does this violate? If I sell a covered call from my IRA well above market value and use a separate account to buy the call, I've effectively added money to my IRA beyond the IRA's annual

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You aren't getting a free lunch (regardless of whether you buy the "same" contract), because the transaction is not guaranteed to transfer money into the IRA. If the call has value, it is because there is some probability that the stock will rise above the strike, in which case you have capped the gains that would otherwise have occurred in the IRA, and effectively transferred money out of the IRA (to the long option account).

If you are so sure that the option will expire worthless, why bother buying it? Why not just do the covered write in the IRA and call that a "free contribution"? It's not -- it's just a choice of investment strategy with the IRA assets. People can and do get "free money" this way with high probability, but not 100%, and the losses are a doozy.

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In my other answer, I interpreted "well above market value" as referring to the call's strike in relation to the underlying. If instead this means that the call is traded well above its market value, then in some ways the question makes more sense. But the problem is that every option that is listed on an exchange, to my knowledge, has a market maker who maintains a bid and ask at all times. So your sell order is hidden, and your buy order is filled at the market maker's ask, unless you choose a price below the ask.

More generally, for assets that are not exchange-traded, selling or contributing an asset to one's own IRA at an unfair price would fall under self-dealing. This is subject to controversy regarding what is an unfair price.

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"Well above market value" isn't clear. You can sell your call at any strike price that you want.

However, to sell a fat premium, you have to be the best ask and that is only possible if the call's B/A is very wide (market disinterest) and you place your sell order one increment below the best ask price (some options trade in 1 cent increments, others in 5 cent increments). I could effect this sell/buy transaction in less than two seconds but though insignificant, there's still two seconds of exposure. So let's say it's 99.99% probable of trading with yourself. Value has no relevance here because you are bypassing the auction which determines option value relative to option pricing variables.

If NBBO is tight then your high sell price (above best ask) will be on the order book but will not be actionable.

If you succeed at self trading, ignoring commissions, you will transfer money (without risk) to your IRA account. But that doesn't necessarily mean success. There are two possibilities:

1) The call expires worthless and you have a gain in your IRA account which will be taxed at lower rates later on. The non sheltered loss on the call benefits you more because you are in a higher tax bracket now. I surmise that this is the germ of an idea in your question.

2) The underlying rises and the call is ITM at expiration. Your IRA position is assigned and you lose the stock at the strike (plus premium) but your non sheltered call leads to a gain, possibly large. In essence, you have shifted gain from the IRA to your taxable account with the higher tax rate. Oops.

"Which law does this violate?"

Prior to the late 90's, selling stock "short against the box" was allowed. This strategy involved taking a short position when you have a capital gain in a long position, locking in the gain until you unwind the position in the new year, delaying taxation and obtaining over a year of full use of the capital. It's now a violation that complicates your tax return

"Short against the box" definitely applies to equities. I believe it also applies to options but I'm not 100% sure. If it does, that's the law that you are violating.