Income from selling options

[dhyun]

Is the income generated from selling options treated as a cash deposit or included in return (e.g. as a dividend)? What happens when the option expires worthless? How is that reflected on the report?

[Mark]

Hi dhyun,

Options are tracked as separate investments in Fund Manager. They do not affect the performance of the underlying stock if you happen to own that also. If you have both the options and the underlying stock in the same sub-portfolio, the effects of both will be included in the overall sub-portfolio returns.

When an option expires worthless you typically would close the position by recording a buy or sell (depending on whether you sold or bought the option) for a cost of zero. For tips on tracking options, see:

http://www.fundmanagersoftware.com/faq_options.php

Since options are their own investment, when you list reports by investment, each option will be listed on its own line.