If anyone remembers (and even if you don’t), back in early September I griped a little about my booked gains/losses for the month of August not showing the premium I received for puts I wrote which were then assigned. The brokerage incorporates the premium received into the cost basis for the shares upon assignment. I may not have liked that then, but I sure do like it now. See illustration below on the transactions and the outcome in my account as of today:
That’s the transaction detail showing the $1,165.95 I received for the puts; my gain/loss sheet for the month showed only the notation “OA” (for option assignment) and no dollar amount credited. Instead, my current holdings show the cost basis being lower than $57.50, as such:
First of all, let’s address the missing shares. You can see that I wrote three puts, but there are only 200 shares shown in my portfolio. I sold 100 shares of SVXY at some point in the interim. If you want to be detailed about it, well – I sold more than 100 shares from several different basis prices, but let’s zoom in on the way the brokerage recorded it (and I was the one who set the LIFO or FIFO, so who really cares, right?) but I did, in fact, sell 100 shares on September 4th for some noble purpose that may not have panned out as profitable, but here is the ugliness, anyway:
So, to recap and refine this story in text format, with the above graphics as visual aids, on August 28th I fell victim to my own put-writing by being assigned 300 shares of SVXY at the contracted price of $57.50. The brokerage left my gain/loss detail for the month looking unimpressive (even more unimpressive than it already was) by recording the gain/loss as a zero for that transaction and instead logging a nicer price for the shares I was forced to buy. Instead of $57.50, they were recorded as $53.61 per share to purchase.
Then on September 4th I got the wild idea to take a loss on 100 of those shares to enable some cockamamie scheme (actually it was for the purchase of in-the-money calls – see my blog entries fromSeptember 16th and October 3rd – and those calls did end up being sold for a profit. It looks I got my loss back and tacked $300 on with that venture.)
As of today, the remaining 200 shares of SVXY sit in my account with the price paid noted as 53.61 and the price as of this writing being 60.85 for an unbooked gain of $1,434.61.
The gain I initially realized from the put writing went straight into buying the shares, but an attractive-looking purchase price was recorded. I lost $743 when selling 100 of those assigned shares, but did make a comparable (plus bonus) profit on a side swindle with the liquidated cash. And my 200 remaining shares could be sold right now for a $1,434.61 profit. So being assigned is not always the disaster it is sometimes thought to be. I used the words “down in the dumps” in September when describing my share holdings, but now I have no complaints.