How do I record a Buy to Open Call Option?

harry askenazi

I've seen similar threads, so apologies if being redundant, but I didn't see anything that helps me figure out how to enter the following type of transaction in Quicken:

1) Buy to Open a Call Option. Ex: Buy 20 contracts at $1.5 each. So total paid for this call option is $3,000
2) Scenario 1: I later sell those contracts, ex sell 20 contracts for $0.5 each, thereby losing $1 per contract
3) Scenario 2: I let the contracts expire worthless
4) Scenrario 3: I exercise the contracts and now own the stock at my strike price

How would I account for each of those scenarios, including the initial purchase of the call option?

Tom Young

You're going long, so a regular "Bought" action is fine.

If you sell before it expires then a regular "Sold" action is fine, for a gain or loss.

If it expires worthless, Sell it for $0. 

If you exercise Buy it back for the same price that you paid for it, for no gain or loss and an increase in "cash" in the Account.  Use that "cash" and the cash that you take out of your pocket to buy the stock.  The cash you paid for the option gets added to the strike price.  I believe the holding period actually starts at the purchase of the option (don't hold me to that).  The only way you can do that in Quicken would be to do a Removed of the stock, then an Added of the stock with the correct  basis and date acquired.