Short Call position at Interactive Brokers shows wrong entry price ?

C

CALLumbus

Hey all,

last week I shorted Lufthansa December Calls with strike 9. I have the shares in my Portfolio, so it is a covered call position.

Now a few days ago, Lufthansa announced a capital increase. Today, the Lufthansa share is being traded ex-subscription rights for the first day. The stock price opened about 2 EUR lower than the day before.

Option prices have been adapted by EUREX. My strike 9 Call has a strike of 6.40 now. This is clear to me.

What I do not understand: I sold the calls last week for 0.26 EUR per contract. But now it shows only an average price of 0.17 EUR in my Interactive Brokers Portfolio. Why does IB adapt my entry price ? This does not make sense, or does it ? Corp. action or not, I sold the calls for 0.26 EUR. If a "wrong" transaction price is shown now, this is also a problem for the tax statement, or no ?

Greetings,
CALLumbus
 
It does. Percentage distance from strike being equal and IV being equal, you would see smaller premiums on a smaller stock. Your stock and the strikes just got smaller even if percentage distance to strike hasn't changed.

Position reporting and transaction reporting are different. Taxes are calculated from your transactions. Think of it as balance sheet vs income statement. Changes should reflect. But, you just enter income and deductable expenses (transactions) when doing taxes for the most part.

Some guys check transaction records daily after the trading day. I am not really sure where cost adjustments are found.
 
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Hey xandman,

thanks for your time to give that detailed feedback.

I still dont really get it. I understand of course the adaptions of strike price, contracts size, stock price... but I sold the calls for 0.26 EUR, I think the system should always reflect that and show the price as I executed it.


But basically it means there is no "cash" adjustment in my portfolio for those Calls, and once I close the position it will show my true realized profit, based on my executed entry price of 0.26 EUR from last week ?
 
In addition to the strike price adjustment, the number of shares deliverable per contract was increased to 140.1188 from 100. This changed your per share basis. Manage your risk accordingly.
 
lpope, thanks for your input. I understand this changes, but I still do not understand why it shows a different entry price than what I actually executed. But I will check the statement tomorrow for any adjustments.
 
The per share basis should have changed as you have observed (because the contract multiplier changed). The per contract basis should be unchanged.

This is the same idea as your per share basis changing after a split.
 
Years ago something like this happened to me when I optioned a covered call on a stock. The company announced a "special" dividend...Not a regular one. Everything got adjusted and it took me a long time to figure it out. I think you're in the same boat. Because I received the "special" dividend (I was the one entitled to it), everything had to be adjusted accordingly...
 
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