Covered call options handling

Vlad Kaplan

When a covered call option expires in the money and is assigned, how does Quicken handle that?

Tom Young

Understand that "Quicken" really doesn't "do" anything, it simply accepts transactions that are either downloaded into it or that you enter manually. It does have a few "wizards" that will create transactions based on your input, but there is no wizard that deals with a covered call being assigned.

For income tax purposes if a covered call is assigned, the strike price plus the premium received becomes the sale price of the stock in determining gain or loss. The resulting gain or loss depends upon the holding period and the basis of the underlying stock. I'd be surprised if the downloaded transactions from the broker actually worked here, so you might need to delete those and make your own entries.

Here's a sequence of entries that I think will work to achieve the desired results, but make a backup first. 1st, make an entry that zeros out your originating entry for no gain or loss, i.e., if your originating entry was a ShtSell action, do a CvrShrt at the same price. That will, effectively, remove the cash in the Account created by the short sale. Then create a Sell action for the stock, with the "proceeds" being the sum of the original free received from the short sell plus the number of shares sold times the exercise price.

Vlad Kaplan

Thanks for a quick response. I'm not concerned about the gain/loss since the transactions are in an IRA. The Sell transaction then will become a essentially a placeholder since the sell price would have to be manipulated to arrive at the total of the shares sold plus the premium received. And reporting on the income generated from these transactions becomes moot. Ugh, one would think that Quicken would be better equipped to handle covered calls and cash secured puts. Those are basic income generating strategies.

miklk

Like was stated above, Quicken isn't "doing"anything. It just processes the transaction that the brokerage sent. MANY brokerages send the wrong transaction for Short Options Expiring which seems like your case.

You need a Cover Short to remove the assigned or expired short call. Edit the downloaded transaction and change it from Sell to Cover Short (usually a ZERO amount on expired options)

Tom Young

If you don't care about gain and loss for tax purposes then CvrSHRT at a price of $0 and sell the security at the strike price. Still two transactions.

Vlad Kaplan

The options expired and got assigned last Fri. Will wait till Mon or Tue for the transaction to download from the broker. If any hiccups, it looks like your suggestion should work for my purposes. I suppose that if the options expire out of money, then a single transaction of covering the short at $0 should do the trick.