Exercising Options

Put and Call options may be bought and sold in the same way as any other security. The major difference between an option and other securities occurs when the option is exercised.

Exercising a Call

To exercise a Call option click the Call Options button then choose “Exercise Long Position” then select the option and share lot to be exercised. When the transaction screen is displayed, fill in the Date Exercised and click the Save button. MI will then create a buy transaction screen for the stock purchased using the Call option. The buy screen will be filled out with the number of shares, principal cost (optioned shares times the strike price) and the cost of the option entered into the “Other Cost” field. If you incur an additional commission when exercising the call option, add it to the buy commission field.

Exercising a Put

Before exercising a put option (i.e., option to sell shares) you must already hold the shares to be sold. If you do not already own the shares to be sold, select Stock-Buy to record the purchase of the shares to be sold before exercising the option.

To exercise a put option click Put Options and choose “Exercise Long Position” followed by the option and lot to be exercised. When the security transaction screen is displayed, enter the date the option was exercised. The program will then display the Sell screen containing all relevant information. If you incur an additional commission when exercising the sale, enter the amount in the commission field. In addition, you may choose a sale method other than the default (First In - First Out) to minimize or maximize your gain or loss.