Tracking Equity Options within Investment Account Manager
« on: August 16, 2018, 01:55:35 PM »
Equity options are contracts between buyers and sellers providing certain rights or responsibilities on the opposite parties. It is beyond the scope of this manual to explain the mechanics of option trading, but for those interested in learning about using options as investments, visit the CBOE website User Guide:

IAM can track the following:
Opening Buy: An Opening Buy transaction is a purchase (going long) of the option. Opening buys enable you to control the rights on shares of an underlying security, providing the right to purchase (call) or sell (put) at a pre-defined exercise price on or before the expiration date. Opening buy transactions are followed by: a closing sale, the exercised rights, or expire worthless.

Closing Sale: A Closing Sale transaction is the sale of a previously purchased (opening buy) call or put option.

Opening Sale: An Opening Sale transaction gives is the sale of option rights to someone else. This is also known as writing (or granting) the option. You are 'selling' the right to buy from you (i.e. call away) or sell to you (i.e. put to you) the underlying security at the strike price and shares per contract on or before the expiration date. An opening sale is treated as a 'short' position on Portfolio Manger reports and is shown as a negative quantity.

Closing Buy: A Closing Buy transaction is the purchase of a previously sold (opening sale) call or put option.

Assignments, exercises, expiration of Options: all of these transactions, and their required tax adjustments, are handled within Investment Account Manager.