Robinhood: Exercised Options Not Detected for Adjustment

Robinhood may report the stock leg of an exercised option with a price that prevents TradeLog from detecting as an assignment.

Impact:

• Can cause large differences in 1099-B Gross Proceeds Reconciliation
• Incorrect taxable gain/loss, depending on when the stock position is closed.

Example:

• Trader has bought one (1) MSFT 29AUG 550 PUT (Open / Long position in TradeLog)
• TradeLog's Exercise/Assign function is looking for a sale of MSFT stock for a price of $550, up to 100 shares

• Problem: Robinhood trade history reported the MSFT stock sale of 100 shares with a price of $549.9998, for an extended total of $54,999.98. As a result, TradeLog will not detect the exercised position for required adjustment.

  Many commission-free brokers may adjust to a marginally lower sell price. For whatever reason, this stock trade has a 2-cent "cost" which has been included in the total amount and reduced the proceeds. 

  In this example, the proceeds of the MSFT sale are $2,000.04 higher than reported on the 1099-B.

How to identify:

1. Search the 1099-B for "adjusted for option premium" in the Additional Information column, then confirm whether the adjustment was made in TradeLog.
   
    
2. Or, search TradeLog for options that appear to have expired, but have a stock trade within the expiration and for a very similar price.

How to fix in TradeLog:

1. Select the stock position and Edit Record (F2 shortcut).
2. Change the Price field the the strike price - in our example: $550
3. Add a Comm amount to equal the original extended Amount - in our example: $0.02
4. Hit the Enter key twice to save the edits.
5. Now, run the Exercise adjustment function, TradeLog should detect the exercise; follow the instructions onscreen to complete those adjustments.

Results in TradeLog after correct adjustment, note the $0.02 cost is still incorporated in the extended amount for the stock leg.