Covered Calls

David Carlson david.carlson.417 at gmail.com
Wed Dec 11 14:40:50 EST 2013


On 12/11/2013 11:33 AM, Les wrote:
> On 12/11/2013 09:36 AM, John Ralls 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
>>
> There is no loss.  I received cash when I sold the covered call (sell to
> open).  Since nobody exercised the call, it expired.  I kept the cash I
> received at time of sale.  I guess I didn't make it clear in my original
> post that it was "sell to open".  So, how do you close an expired option
> that has zero value?  (Buy to close?)
>
> Thanks,
> Les
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That is a good question which could be generalized to cover short sales
in general as well as various strategies involving puts and calls.  I
think GnuCash could be stretched to do capital gains on purchase
transactions since it is mostly just using the number signs, but it
might confuse the lot tracking wizard if you use that.  However, I have
not tried it.

David C


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