Covered Calls

[Les]

On 12/11/2013 11:57 AM, Steve wrote:
> ---- John Ralls <jralls at ceridwen.us> wrote: 
>> On Dec 11, 2013, at 6:39 AM, Les <lelliott5 at gmail.com> wrote:
>>
>>> Does anyone know how to handle the sale of covered calls that expire
>>> without being exercised in GC? I am wondering if there is a transaction
>>> needed to close out the expired call. 
>> Of course you have to close out the expired call. Its value goes to zero, and you need to book the loss. IIRC it goes to short-term cap gains, but it's been a few years since I did covered calls and I don't remember all of the wrinkles.
>>
>> Regards,
>> John Ralls
> I, too am interested in how to handle options. Covered calls are probably the easiest.
>
> If you sold the covered call then you receive a premium and if it expires worthless then you get to keep the premium which is a gain not a loss. (I'm sure the OP knows this or they wouldn't be trading option!)
> Should that gain be income or is it capital gains?
> If you bought the call and it expires worthless, then you will have a loss which needs to be booked as John said. 
>
> If you sold the call and it gets exercised then you will get called out of your stock at the strike price.
> How should the profit/loss be reported.
>
> For example, say you bought 100 ABC for $10 for a total cost of $1000. ABC goes up to $15 and you sell a covered call for $1 at $15. ABC goes up to $16 and you get called out at $15.
> Your profit an the overall transaction is ((15 - 10) + 1) x 100 = $600.
> Is it possible to get a report that would show that?
>
> And then there are vertical spreads, calendar spreads, iron condors, etc, etc, etc and you can roll to follwing months etc, etc.
>
> Steve
>
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.
In my particular case, my options are being handled within my IRA, so
taxes are not an issue.  I am interested in gains and losses of course. 

Steve:
Thanks for bringing the "other options" to the fore.  These are
certainly important ways to book profits and limit losses and needs some
way of accounting for them that addresses gains (either long or short)
cap gains, etc. 

Les