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Add Edit Delete Option Transactions

You can use the Portfolio Accounts to manage Option Transactions. timetotrade provides support for European and American style options and provides position management features for a range of option strategies such as:

  • Covered Calls
  • Bear Call Spreads
  • Bull Put Spreads
  • Credit Spreads
  • Debit Spreads

The position management feature enables you to view each option in relation to the overall position. For example if you have sold a covered call against a share position or created a credit spread, you are able to view the contribution from each option to the top line position, as illustrated in the following screen shot:

Investments 5-8.PNG

In the above Covered Call example, a call option has been sold against a share position in Paychex. The top line figures reflect the gain from selling the covered call option to help you determine your overall gross profit. In the above example the 'average price' of the purchased Paychex shares is $38.92. As a result of selling the June $40 call option, the 'average cost' of the Paychex shares is reduced by $1.7005 per share i.e. the gain from selling the covered call, hence the top line 'average price' is reduced to $37.2195.

The 'gross value' and 'gross profit' fields include any liabilities associated with the current option position. For example, the Paychex June $40 call option is currently trading at 85 cents, therefore the liability associated with selling the covered call for one American style contract of 100 shares is $85. If you decided to buy back the June $40 call to avoid being called out, then it would cost $85 (before commissions) to do so, and this is reflected in the top line position. If the June $40 call was to expire worthless, then the top line 'total cost' and related 'average price' would remain as they are, however there would no longer be any liability associated with the option which would increase the 'gross profit' as illustrated in the following screen shot:

Investments 5-9.PNG

In the Microsoft credit spread example, the 'total cost' provides a summary of the credit you gained from creating the credit spread. The 'last trade' field tells you what price Microsoft is currently trading at, which in this case is $31.11, therefore as your credit spread is set up between $30 and $32.50 you are able to tell at a glance how close you are to your credit spread limits. The 'gross value' field provides a summary of the current value of the options if you where to close the position; in this example it would cost more to close the position than the gain associated with creating the position, however as Microsoft is currently trading between the spread limits, as it stands the options would expire worthless. The 'gross profit' and 'gross % profit' fields reflect your overall gain in relation to the 'average cost'.

Lastly from a UK taxation perspective, when generating Form 185(new) tax returns timetotrade complies with the HMRC rules for the treatment of gains and share transactions that result from options transactions, such as being called out, or having shares put to you.

In the following steps we will discuss how to enter option transactions.

Step 1: Select a Portfolio Account

The share tab section of an Account is used to input share related transactions and view the value of your current investments. The share tab can be used to enter and manage:

  • share transactions
  • dividends received
  • option transactions
  • the value of open positions

To add option transactions to an share account, you can use the drop down navigation menus to go directly to the share section of the account that you would like to add the transactions to, as illustrated in the following screen shot:

Portfolio Accounts Actual Shares.png

or click on the Portfolio Account name:

Investment Overview 2.png

and then click on the 'shares' tab as illustrated:

Investment Overview 5.png

To add, edit or delete an options transaction in the Investments tab, complete the following steps.

Step 2: Edit Transactions

Within the investments tab for a given Account, the option transactions section lists the historical investment transactions that occurred between the selected 'start date' and 'end date'. To add a option transaction, click on the option transaction ‘edit’ button as illustrated in the following screen shot.

Investment 6-1.png

Step 3: Enter the Option Transaction

Enter the option transaction details as illustrated in the following screen shot example.

Options 1-1.png

The Call and Put option transaction types supported are:

  • Buy to Open e.g. buy a Put to create an open position
  • Sell to Open e.g. sell a Cover Call option to open a position
  • Buy to Close e.g. buy back a Covered Call option to close an open position
  • Sell to Close e.g. sell a Put to close an open position
  • Expire e.g. if a Covered Call option expires worthless
  • Call Out e.g. if a Covered Call results in you having to sell your shares at the agreed strike price
  • Put To e.g. if you sold a Put and had shares put to you.

The contract sizes supported are:

  • 100 shares e.g. American style option contract that consists of 100 shares
  • 1,000 shares e.g. European style option contract that consists of 1,000 shares

In the open positions section you can view the contract size and the number of contracts sold in the 'quantity' field. Sell to Open are represented in brackets e.g. if you sold 3 American Style covered calls it would be represented as (100 x 3) whereby the 100 represents the number of shares associated with the contract size, and the three represents the number of contracts sold.

Please note that the price associated with a UK option transactions should be entered in pence (GBX); commissions and tax should be entered in pounds (GBP). For US Dollar and Euro transactions all fields should be entered in Dollars and Euros respectively.

When you are finished adding option transactions click on the 'done' button.

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