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Investments - recording a "buy to close" option trade

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  • rjwerning
    First time I ve ever had a need to record this sort of transaction in Ace, which I use primarily for recording my investments. I had sold some covered calls
    Message 1 of 6 , Mar 20, 2012
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      First time I've ever had a need to record this sort of transaction in Ace, which I use primarily for recording my investments.

      I had sold some covered calls (which I record as "dividends" because there isn't any "option" action), and the window was there today to close out those contracts with a buy to close.

      For reference:
      Selling a covered call means I sold the right to someone else to sell stocks that I own (for a premium) at a set price.
      Buy to close means that I wanted to buy the same right from someone else, to close out the covered call that I had sold.


      What I want to do is record a negative transaction against a specific investment, that decreases the amount of cash on hand I have in the account and increases the cost basis of the stock. I can't record it as a "dividend" transaction like I did selling the covered call, as a dividend transaction won't let me put a negative number in.

      I was able to record it as a "Buy" Invest transation, 0 shares, 0 price, and just put in the total. But as soon as I open that transaction up for edit it changes the values - so clearly it's not working correctly.

      Any thoughts?
    • David Polister
      Since no one else has replied, and this sounds like a real familiar question asked not long ago, I ll repeat what I said then. (And add more to it) Selling an
      Message 2 of 6 , Mar 21, 2012
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        Since no one else has replied, and this sounds like a real familiar
        question asked not long ago, I'll repeat what I said then. (And add more to
        it)

        Selling an option is not a dividend. You can sell an option like you would
        buy one. You just have to be sure your numbers are correctly +/- so the
        totals are correct. Here is a copy of my covered call sell. On this
        transaction, I deposited in my account the 338.80 from selling my covered
        option after commission/fee.

        *Date Action Symbol
        Account Price Quantity Commission Total
        Notes
        12/08/2011 Sell FCX120519C00043000 Personal Investment
        350.0000 1.0000 11.2000 338.8000 order posting

        *I would think that a similar transaction to the above should work for the
        "Sell to close"
        My Guess would be:

        *Date Buy (Your Symbol)
        Account Amount Paid Qty Fee/Commission total Notes*

        Try it and let me know, I'm sure I'll need to do that side too at some
        point.

        On Tue, Mar 20, 2012 at 9:20 AM, rjwerning <rjwerning@...> wrote:

        > **
        >
        >
        > First time I've ever had a need to record this sort of transaction in Ace,
        > which I use primarily for recording my investments.
        >
        > I had sold some covered calls (which I record as "dividends" because there
        > isn't any "option" action), and the window was there today to close out
        > those contracts with a buy to close.
        >
        > For reference:
        > Selling a covered call means I sold the right to someone else to sell
        > stocks that I own (for a premium) at a set price.
        > Buy to close means that I wanted to buy the same right from someone else,
        > to close out the covered call that I had sold.
        >
        > What I want to do is record a negative transaction against a specific
        > investment, that decreases the amount of cash on hand I have in the account
        > and increases the cost basis of the stock. I can't record it as a
        > "dividend" transaction like I did selling the covered call, as a dividend
        > transaction won't let me put a negative number in.
        >
        > I was able to record it as a "Buy" Invest transation, 0 shares, 0 price,
        > and just put in the total. But as soon as I open that transaction up for
        > edit it changes the values - so clearly it's not working correctly.
        >
        > Any thoughts?
        >
        >
        >



        --
        David N. Polister


        [Non-text portions of this message have been removed]
      • rjwerning
        David, thanks for the reply. I agree that a option trading isn t a dividend, but because of how I want to see the data reported it s the easiest way to get it
        Message 3 of 6 , Mar 22, 2012
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          David, thanks for the reply. I agree that a option trading isn't a dividend, but because of how I want to see the data reported it's the easiest way to get it there. When I run my stock analysis report, I want to be able to see how much I originally invested in purchasing the stocks, how much I earned off of real dividends & how much I made off of selling covered calls for those options. So just using a standard deposit transaction of the amount wouldn't give me the data grouping I'm looking for.

          I put in a ticket for an enhancement to add an Investment Transaction Action of "Options". For my purposes, if I can just record the total price, commissions paid & Total, and have it allow entering negative numbers it'd work fine. If negatives won't work, then we'd need an "Buy Option" and "Sell Option" action.

          - Rich

          --- In acemoney@yahoogroups.com, David Polister <dave.polister@...> wrote:
          >
          > Since no one else has replied, and this sounds like a real familiar
          > question asked not long ago, I'll repeat what I said then. (And add more to
          > it)
          >
          > Selling an option is not a dividend. You can sell an option like you would
          > buy one. You just have to be sure your numbers are correctly +/- so the
          > totals are correct. Here is a copy of my covered call sell. On this
          > transaction, I deposited in my account the 338.80 from selling my covered
          > option after commission/fee.
          >
          > *Date Action Symbol
          > Account Price Quantity Commission Total
          > Notes
          > 12/08/2011 Sell FCX120519C00043000 Personal Investment
          > 350.0000 1.0000 11.2000 338.8000 order posting
          >
          > *I would think that a similar transaction to the above should work for the
          > "Sell to close"
          > My Guess would be:
          >
          > *Date Buy (Your Symbol)
          > Account Amount Paid Qty Fee/Commission total Notes*
          >
          > Try it and let me know, I'm sure I'll need to do that side too at some
          > point.
          >
          > On Tue, Mar 20, 2012 at 9:20 AM, rjwerning <rjwerning@...> wrote:
          >
          > > **
          > >
          > >
          > > First time I've ever had a need to record this sort of transaction in Ace,
          > > which I use primarily for recording my investments.
          > >
          > > I had sold some covered calls (which I record as "dividends" because there
          > > isn't any "option" action), and the window was there today to close out
          > > those contracts with a buy to close.
          > >
          > > For reference:
          > > Selling a covered call means I sold the right to someone else to sell
          > > stocks that I own (for a premium) at a set price.
          > > Buy to close means that I wanted to buy the same right from someone else,
          > > to close out the covered call that I had sold.
          > >
          > > What I want to do is record a negative transaction against a specific
          > > investment, that decreases the amount of cash on hand I have in the account
          > > and increases the cost basis of the stock. I can't record it as a
          > > "dividend" transaction like I did selling the covered call, as a dividend
          > > transaction won't let me put a negative number in.
          > >
          > > I was able to record it as a "Buy" Invest transation, 0 shares, 0 price,
          > > and just put in the total. But as soon as I open that transaction up for
          > > edit it changes the values - so clearly it's not working correctly.
          > >
          > > Any thoughts?
          > >
          > >
          > >
          >
          >
          >
          > --
          > David N. Polister
          >
          >
          > [Non-text portions of this message have been removed]
          >
        • rjwerning
          As I thought about it, perhaps an example would make more sense in what I want to achieve. Lets take Johnson Controls (JCI) for example: November I purchased
          Message 4 of 6 , Mar 22, 2012
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            As I thought about it, perhaps an example would make more sense in what I want to achieve.

            Lets take Johnson Controls (JCI) for example:

            November I purchased shares for 30.54.
            I collected .18c dividend in Jan
            I have another .18c dividend payable 4/1.
            I've sold covered calls 2x, once at 1.25 the other at 1.50. Neither time were the options assigned.

            Total earnings has been 3.11 per share.
            When I look at my investment report, I want to know how much I've earned off the stock and what my initial investment was, so with a quick calculation I can see that my shares now have only cost me $27.43 each.

            I do multiple covered calls per month. So just adding them as a deposit decouples the income from selling the covered call, from the actual stock itself.
          • David Polister
            Well, I see better what you are trying to achieve at least. As long as it almost works for you, go with it. I ve not seen any other program do what you re
            Message 5 of 6 , Mar 22, 2012
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              Well, I see better what you are trying to achieve at least. As long as it
              almost works for you, go with it. I've not seen any other program do what
              you're looking for either right off, either. I've used several over the
              last few decades. Though the investments side has been more in the last
              decade plus or so.

              Are you basically just trying to see what your net basis is after selling a
              covered call option? Is that closer to what you're trying to do?

              On Thu, Mar 22, 2012 at 11:04 AM, rjwerning <rjwerning@...> wrote:

              > **
              >
              >
              > As I thought about it, perhaps an example would make more sense in what I
              > want to achieve.
              >
              > Lets take Johnson Controls (JCI) for example:
              >
              > November I purchased shares for 30.54.
              > I collected .18c dividend in Jan
              > I have another .18c dividend payable 4/1.
              > I've sold covered calls 2x, once at 1.25 the other at 1.50. Neither time
              > were the options assigned.
              >
              > Total earnings has been 3.11 per share.
              > When I look at my investment report, I want to know how much I've earned
              > off the stock and what my initial investment was, so with a quick
              > calculation I can see that my shares now have only cost me $27.43 each.
              >
              > I do multiple covered calls per month. So just adding them as a deposit
              > decouples the income from selling the covered call, from the actual stock
              > itself.
              >
              >
              >



              --
              David N. Polister


              [Non-text portions of this message have been removed]
            • rjwerning
              If I understand it correctly, yes - I m looking for the net basis. I want to know how much money I still have invested in a stock. ie. what it cost me, less
              Message 6 of 6 , Mar 23, 2012
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                If I understand it correctly, yes - I'm looking for the net basis. I want to know how much money I still have "invested" in a stock. ie. what it cost me, less whatever money I've received out of it from dividends or selling covered calls.

                I'm by no means an expert in any of this - neither accounting nor trading. Guess I'd consider myself a moderately knowledgeable novice (at best) in both. It's just the tool I use to make sense of things. As long as the current value of a stock is greater than my 'invested' cost of a stock, I don't care how low it goes.

                I'm all about the revenue stream in this fund - dividends & options. It's working out ok for me so far. :)

                - Rich


                --- In acemoney@yahoogroups.com, David Polister <dave.polister@...> wrote:
                >
                > Well, I see better what you are trying to achieve at least. As long as it
                > almost works for you, go with it. I've not seen any other program do what
                > you're looking for either right off, either. I've used several over the
                > last few decades. Though the investments side has been more in the last
                > decade plus or so.
                >
                > Are you basically just trying to see what your net basis is after selling a
                > covered call option? Is that closer to what you're trying to do?
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