Knowledgebase
Basis Adjustment for Exercise/Assign/Expire of Options
Posted by Henry Gage on 25 March 2011 04:33 AM
Regarding: Basis Adjustment for Exercise/Assign/Expire of Options

Keywords: Schwab, Options, Call Expired Worthless - Reminder, Put Expired Worthless - Reminder, Call Assigned - Reminder, Put Assigned - Reminder, Basis Adjustment

Question:
The software is creating assigned reminders on put options that are buy to open(Writer as opposed to holder). They should be
reminders for exercise and/or expire? Then when I attempt exercise and link from Parent to child, it is requesting a buy transaction that is summarized in Part II of the Dialogue. When I select a one of the eligible transactions and implement that suggestion, I receive a request to sell what I just bought. It is the latter sell that remains as a duplicate in my transaction screen for a given security thereby overstating by identical amount something already sold. I need to be able to adjust premium to respective common stock transaction, I don't see how automatic dialogue can do this.

Answer:
If using Tool/Options - Manual..., when a Sold Call is Assigned TA will ask for the Sold underlying trade so it can apply a basis adjustment to it. When a Sold Put is Assigned TA will ask the Bought underlying trade so it can apply a basis adjustment.

An alternative to this complexity is to print out the list of option trades that you plan to manually exercise/assign and then delete them from TA. The reason you can delete them is because they are settled for no gain/loss. Then you can select the underlying position acquired or sold and select Modify for each trade and add the premium manually using the basis adjustment field that is part of every transaction. To quickly edit a trade you can double click on it. This is a more direct approach to using the menus.

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