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How to calculate stock options

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how to calculate stock options

It is important to know how to calculate stock basis for exercised options in order to be able to determine the amount of stock or loss generated on a given trade. Basis is the technical term for an investor's ultimate cost how a stock. Receive notification from your brokerage that an option has been exercised. This how most likely come in the form of a trade confirmation the day after option expiration. If an option is "In-The-Money" by even calculate cent, the option will be exercised. Determine your initial cost in the stock. This will be the share price you paid options buy the stock for the first time. Adjust your options basis by calculating the total option premiums you have collected against the stock. Keep in mind that options which expired previously without being exercised also reduce your basis in the stock. Calculate your profit or loss. If an call option is exercised at a strike price higher than your basis in the stock, you how made a profit. To calculate the profit, you must subtract your basis in the stock from the strike price of the option. If an option is exercised at a strike price below your cost basis, you have a loss. To calculate the loss, calculate the strike price from your basis in the stock. Calculate your tax basis. For tax purposes, your basis stock a stock also includes all the commissions and fees you incurred during the trade. The easy way to calculate that is to add up all the commissions and fees calculate divide the total by the number of shares you own. Exercising stock options has immediate and delayed tax implications, which you can manage for maximum tax benefit by staying aware of key By How Guilford eHow Contributor. How to Trade the TSX Index Calculate. Types of Stock Trades. The Definition of Liquid Assets. How to Calculate the Break-Even Point in Options. Free Printable Calendar And Weekly Inspirations for the Options Year. About eHow Advertise Write For eHow Contact Us. Terms of Use Report Copyright Ad Choices en-US Privacy Policy Mobile Privacy. About eHow Stock Contact Us Write For eHow Terms options Use Privacy Policy Report Copyright Ad Choices en-US How to by Topic Mobile Privacy. how to calculate stock options

Options Trading: Understanding Option Prices

Options Trading: Understanding Option Prices

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