Option Cover Due to worthless expiry

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Pk

08 Jun, 2020 10:31 PM

When I enter cover transaction for short option. Need to enter zero amount as there is no cash movement involved here. That seems to work fine but somehow Price of the option keep showing to me as 100 . That does not seem to cause any issue but it is confusing and odd when you looking at your transaction and see price as 100.

is that something I am doing wrong or this is some bug in moneydance? Anyway to avoid MD to show 100 as option price and instead show 0.

  1. 1 Posted by dwg on 09 Jun, 2020 03:02 AM

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    I'm a fellow user.

    I do not believe Moneydance allows for a 0 price in a cover transaction. I believe some programs take a 0 price in a Cover transaction to mean that the option was allowed to lapse I'm not convinced this is the case with Moneydance and thus be best approach to take.

    The short transaction would have increased the Cash balance in the account, by 109.38 in your example, although you would not see this reflected in the side bar or on the summary page, as this seems to be netted within the account.

    I would be looking for the short and its matching cover transactions to come to a net result of 0 within the account as well as outside of it and I would think a short transaction of 1 option with a total value of 109.38 would achieve this in this case. the only cost would therefore be the fee (i.e premium).

  2. 2 Posted by Pk on 10 Jun, 2020 02:42 AM

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    Thanks for reply. As I understand money dance seems to be working correct to maintain cash balance. It does not matter if I use shortsell or just sell for opening txn.

    Only problem to me it does seems to default price per 1 option contract unit to 100 when i enter total cost as zero for the cover transaction. Total cost is still 0 for the cover transaction. As I said before it does not cause any problem as such it is just annoying and confusing to see 100 as option price while for cover tranaction.

    BTW it does not matter if I use buy instead of cover. it handling cash balance correctly but still showing option price for buy as zero. Seems like it not able to calculate price per unit as zero when total cost is zero.

  3. 3 Posted by Pk on 10 Jun, 2020 02:43 AM

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    Looks like attached did not work in my last post.

  4. 4 Posted by dwg on 10 Jun, 2020 02:55 AM

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    I'm a fellow user.

    There are places in Investment accounts where Moneydance uses values like 100 as placeholder values, i.e. they have no effect but it seems the software requires something to be there, this is especially noticeable in dividends were there should be no price but you routinely see values like 100. It is possible that a similar thing is happening here, or it could just be that Moneydance has a problem with a zero amount especially if it is not expected. I have not really seen any information of the expectations Moneydance has when using Short and Cover transactions.

  5. 5 Posted by DavidR on 17 Jun, 2020 05:48 PM

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    I also have a question re Cover. I sold a put option on a stock in May and recorded it as a short sale. Everything seemed fine. The cash was properly recorded. Today I closed the contract at a non-zero price, so that aspect of the previous discussion is not relevant. I made a capital gain on these transactions, but the capital gains report still shows the entire gross revenue on the original sale as my gain. This is wrong; I paid something to close the contract. The cash part of the recording is fine. Any advice?
    Thanks.

  6. 6 Posted by dwg on 17 Jun, 2020 09:34 PM

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    I'm a fellow user.

    I noticed the Capital gains report is wrong when there are short/cover transactions. The capital gains report seems to have a number of problems, for example it does the same sort of thing on unrealised capital gains.

  7. System closed this discussion on 16 Sep, 2020 09:40 PM.

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