Money: How to Track Call and Put Options (196698)


The information in this article applies to:

  • Microsoft Money 2003 Deluxe
  • Microsoft Money 2003 Deluxe and Business
  • Microsoft Money 2003 Standard
  • Microsoft Money 2002
  • Microsoft Money 2001
  • Microsoft Money 2000
  • Microsoft Money 99
  • Microsoft Money 98
  • Microsoft Money 97
  • Microsoft Money 2000 Business and Personal
  • Microsoft Money 98 Deluxe Edition
  • Microsoft Money 98 Financial Suite
This article was previously published under Q196698

SUMMARY

This article describes call and put options and describes how to use Microsoft Money to track them.

MORE INFORMATION

An option is a contract between two investors that grants one investor the right to buy or sell a specific stock at a specific price within a specific time period. The two main types of options are call options and put options.

A call option or call is an option that gives the holder the right, but not an obligation, to buy a specific stock at a specific price within a specific time period.

A put option or put is an option that gives the holder the right, but not an obligation, to sell a specific stock at a specific price within a specific time period.

When you exercise your option in a contract, you either call (buy) or put (sell) the stock.

The option price is the price per share of the underlying stock. To calculate the purchase price for an option, multiply the option price by the number of shares in the option. An option contract typically represents 100 shares of the underlying stock.

The strike price is the price per share at which the underlying stock can be purchased (for call options) or sold (for put options) during a specified period.

The expiration date is the last day of the time period during which you can exercise an option. An option becomes worthless after this date.

When you track call and put options in Money, make sure you create a new investment for each call or put option, even if you have already created an investment for the underlying stock covered by the option.

Opening a Position for an Option

To open a position for a call or put option, follow these steps to record a Buy or Sell transaction for the option:

Note Make sure you have your brokerage statement handy.
  1. Use the appropriate method for your version of Money.

    Money 2003, Money 2002, Money 2001, and Money 2000

    If you use Money 2003, Money 2002, Money 2001, or Money 2000, follow these steps to create a new investment transaction:
    1. Click Investing, and then click Portfolio. Click the Investment Account that you want to use for the call or put option.

      Note If you have not created an Investment Account, please see the Create An Investment Account help topic in Money online Help.
    2. In the transaction form, click New.

    Money 98, or Money 99

    If you use Money 98, or Money 99, follow these steps to create a new investment transaction:
    1. On the Account Manager screen, double-click the Investment Account that you want to use for the call or put option.

      Note If you have not created an Investment Account, see the Creating An Investment Account help topic in your Money printed documentation or Money online Help.
    2. In the transaction form, click New.
  2. In the Investment box, type a descriptive name for the call or put option, and then press the TAB key.
  3. When you are prompted to select the type of investment, click Stock (Common, Preferred, And Options), and then click Next.
  4. In the Symbol box, type the quote symbol for the stock or click Find Symbol to look up the symbol for the stock, and then click Finish.
  5. In the Activity box, click Buy to record the purchase of an option, or click Sell to record the sale of an option.
  6. In the Quantity box, type the number of shares (usually 100 shares) the call or put option entitles you to buy or sell.
  7. In the Price box, type the purchase price for the call or put option.
  8. In the Commission box, type the amount of the commission, if any.
  9. When you are finished entering the information for the transaction, click Enter.

Closing an Option Position

If you sell an option you purchased before it expires, follow the steps in the "Opening a Position for an Option" section to record a Sell transaction using the sale price (not the strike price) for the option.

If you purchase an option you sold before it expires, follow the steps in the "Opening a Position for an Option" section to record a Buy transaction using the purchase price (not the strike price) for the option.

If an option you purchased expires, follow the steps in the "Opening a Position for an Option" section to record a Sell transaction for the option, using zero for the sale price.

Money accurately tracks the loss.

If an option you sold expires without being exercised, follow the steps in the "Opening a Position for an Option" section to record a Buy transaction for the option, using zero for the purchase price.

Money accurately tracks the gain.

Recording the Exercise of an Option

If you exercise a call option you purchased, follow these steps:
  1. Follow the steps in the "Opening a Position for an Option" section to record a Sell transaction for the option, using zero for the sale price.
  2. Follow the steps in the "Opening a Position for an Option" section to record a Buy transaction for the appropriate number of shares of underlying stock, using the strike price as the purchase price.
If you exercise a put option you purchased, follow these steps:
  1. Follow the steps in the "Opening a Position for an Option" section to record a Sell transaction for the option, using zero for the sale price.
  2. Follow the steps in the "Opening a Position for an Option" section to record a Sell transaction for the appropriate number of shares of underlying stock, using the strike price as the sale price.
If someone exercises a call option you sold, follow these steps:
  1. Follow the steps in the "Opening a Position for an Option" section to record a Buy transaction for the option, using zero for the purchase price.
  2. Follow the steps in the "Opening a Position for an Option" section to record a Sell transaction for the appropriate number of shares of underlying stock, using the strike price as the sales price.
If someone exercises a put option you sold, follow these steps:
  1. Follow the steps in the "Opening a Position for an Option" section to record a Buy transaction for the option, using zero for the purchase price.
  2. Follow the steps in the "Opening a Position for an Option" section to record a Buy transaction for the appropriate number of shares of underlying stock, using the strike price as the purchase price.
Note To calculate the capital gain or loss for stock you acquire or sell when you exercise a call or put option, you must include the option price as part of the purchase or sale price for the stock. For information about how to properly calculate and report your taxes, see a tax professional.
Modification Type:MajorLast Reviewed:1/5/2005
Keywords:kbhowto kbMoneyInvest kbui KB196698
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