Adjusted Cost Basis

How your Adjusted Cost Basis is Calculated

Taken as the cost basis for any shares of the equity minus any options income. For example. Let's say you own 200 shares of company X at an average per share cost of $9. Your cost basis then is $9.

Then let's say that you sell an option contract for $0.50/share or $50 of income.

Your adjusted cost basis becomes: 9 - (50 / 200) = $8.75

How this affects the bot

The bot will avoid selling call options below this cost basis. The scenario happens when you are assigned on a put option and the subsequently the stock falls sharply such that the bot cannot sell even OOTM call options that are above the adjusted cost basis.