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Issue with Call Assignment after Covered Call

EricC

I’m trying to fix a transaction related to a Covered Call and associated Assignment. Here is the scenario:

Jan 23, 2023

Sold 1 NVDA (Feb 17, 2023) $200 Call

Quicken reflects a ShtSell transaction

Share balance for the option in Quicken is -100

Feb 21, 2023 (Option is assigned on Feb 17)

Quicken reflects a CvrShrt transaction

Option is closed out and share balance in Quicken is 0

However, the transaction generates a debit to cash (like I'm buying the shares) vs. increasing cash (for having shares called away).

What am I missing? I’m sure it’s something simple.

Thank you.

Quicken Premier for Windows.

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Comments

NotACPA

When you sold the Call you received cash. A CvrSht IS a buy,you bought back the shares that you shorted … and you should have a cash outflow.

EricC

Thanks for the quick response @NotACPA! In this case, I didn't Cover the Short buy buying back the shares. It was assigned, resulting in a sale of the shares. However, you can't enter a Sold transaction because the Share Balance is -100 from the original SellShrt. Do you know what the proper transaction or transaction sequence is for this scenario? Thank you.

bmciance

The CvrSht is to close out the option. There should be no money on that transaction, just shares. Then you SOLD the shares of NVDA. That is where you get your cash credit.

EricC

That's the trick! My brain wasn't working. Once I add the SOLD for the NVDA underlying shares (in addition to the CvrSht for the options) the transaction sequence works. Thank you.

Tom Young

I think you're looking at the transaction over in the Investment Transaction Report?

That's pretty much a presentation issue in that in that Report the CvrSht IS shown as a cash reduction, and it IS confusing. If you look at the CvrSrt in the Transaction List you should see NO effect on cash as that's a $0 transaction. But if you stitch together the cash in for the ShtSell sell and the cash associated with the actual sale of the stock - basis removed +/- Gain/Loss on the Transaction Report - you should come back to the correct over all cash effect of the ShtSell/CvrSrt+the short sell assignment.

pauljasmine

I reported an issue to Quicken several years ago, but it was never resolved. I don't know if this is only an issue with my brokerage download or not. I use Fidelity for my brokerage. When I sell a covered call, the downloaded transaction is correctly displayed as ShtSell. But when it expires or is assigned, the downloaded transaction is displayed as Added, and the covered call option remains in my portfolio. I then have to manually change the Added to CvrShrt to remove the option from my portfolio. Why it makes an expired call transaction Added makes no sense to me. But maybe it's a problem with Fidelity's downloading. Wish I knew where the problem is. Quicken never acknowledged my issue report.

pauljasmine

EricC - When you initially sold the covered call (ShtSell), that's when the cash is added to your account. For covered calls, you have to have 100 shares of the stock for each covered call contract. If the call is assigned at expiration, your 100 shares of the stock is automatically sold (Sold) at the call option price. The transaction code for the call option is CvrShrt, and there is no cash transacted, and the transaction code for the actual stock shares is Sold, and you will have a cash transaction of 100 shares at the option price per share.