recording option to stock conversion.

Posted by Jim_the_geek on September 5, 2006, 9:38 pm

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I bought some calls which I let expire so as to have the stock
delivered to me. I can not figure out a "Quicken assisted" method to
close out the option position and roll the cost of the option into the
basis of the stock delivered to me. Can Quicken handle this? As I
understand it tax-wise, Since I took possession of the stock I do not
have to report any gain/loss (in my case a gain) until I sell the stock
and the holding period for the stock starts on the day of delivery of
the stock (not when I took the position in the option).

If I do it "manually" I can sell the option for what it cost me and
then buy the stock at strike price + commission + option cost + option
commission. It is "tax accurate" and not too hard to implement but
doesn't really capture the transaction "flow"....

any help apprecaited!

Thanks,
Jim

Posted by Stubby on September 6, 2006, 9:03 am

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This is unclear. Did you exercise the option and buy X shares for $Y?
Or, did you (as you said) let the option expire and not get any stock?

I haven't traded options in decades, but I always thought of the option
as a completely separate security from the stock it's tied to. Each is
bought for a price and sold for a profit or loss.

Jim_the_geek wrote:

> I bought some calls which I let expire so as to have the stock

> delivered to me. I can not figure out a "Quicken assisted" method to

> close out the option position and roll the cost of the option into the

> basis of the stock delivered to me. Can Quicken handle this? As I

> understand it tax-wise, Since I took possession of the stock I do not

> have to report any gain/loss (in my case a gain) until I sell the stock

> and the holding period for the stock starts on the day of delivery of

> the stock (not when I took the position in the option).

> If I do it "manually" I can sell the option for what it cost me and

> then buy the stock at strike price + commission + option cost + option

> commission. It is "tax accurate" and not too hard to implement but

> doesn't really capture the transaction "flow"....

> any help apprecaited!

> Thanks,

> Jim

Posted by Jim_the_geek on September 6, 2006, 2:20 pm

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Stubby:

Sorry. I bought a call option which was in-the-money at expiration and
so I let stock be delivered.

I bought $35 call option on BHP and on day of expiration the stock was
selling for $42 so I had the shares delivered to me for which I paid
$35/share.

So for tax purposes (and to keep Quicken from posting things I don't
want posted to my capital gains report) I think I can do what I said
below, but was wondering if Quicken offered a more elegant solution
;-)

Thanks,
Jim

Stubby wrote:

> This is unclear. Did you exercise the option and buy X shares for $Y?

> Or, did you (as you said) let the option expire and not get any stock?

> I haven't traded options in decades, but I always thought of the option

> as a completely separate security from the stock it's tied to. Each is

> bought for a price and sold for a profit or loss.

> Jim_the_geek wrote:

> > I bought some calls which I let expire so as to have the stock

> > delivered to me. I can not figure out a "Quicken assisted" method to

> > close out the option position and roll the cost of the option into the

> > basis of the stock delivered to me. Can Quicken handle this? As I

> > understand it tax-wise, Since I took possession of the stock I do not

> > have to report any gain/loss (in my case a gain) until I sell the stock

> > and the holding period for the stock starts on the day of delivery of

> > the stock (not when I took the position in the option).

> >

> > If I do it "manually" I can sell the option for what it cost me and

> > then buy the stock at strike price + commission + option cost + option

> > commission. It is "tax accurate" and not too hard to implement but

> > doesn't really capture the transaction "flow"....

> >

> > any help apprecaited!

> >

> > Thanks,

> > Jim

> >