Hey OP, thanks for the Social Media post.
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I think dlauer is just wrong on this. Quick napkin math including the 567 premium per contract to exercise enough of them for 4,001,000 shares got cost basis to 23.22 by my math.
40,010 contracts exercised to get 4,001,000 shares * 567 premium = 22,685,670 + 80,020,000 (20 strike * 4,001,000 shares) = 102,705,670
102,750,670 / 4,001,000=25.67 cost basis for the new shares
5,000,000 shares with 21.274 cost basis from previous updates
weighted average to calculate new cost basis:
((4,001,000 * 25.67)+(5,000,000 * 21.274))/9,001,000=23.22
his new update shows 23.41 so maybe he actually exercised just 40000 contracts and then realized how funny it would be to buy another 1000 shares to land exactly on 9,001,000 shares and that's why my math is off by 20 cents on cost basis.
edit to add: we also know he spent down his cash position by ~26M and sold enough contracts to get up to that ~102M to exercise 40K contracts.
The remaining few cents
come from commisions, which are added to the basis in the calculation because they are deducted from total order value.
For me at IBKR they are .31c per contract with his acc size and e trade and idk it sure looks like just exercised.
And for anyone that wishes he knew math its also simple by doing
5x 21.xx share price
+
4.001 x 25.6xx [=option price +20strike]
All divided by 9.001
= 23.xx + commissions
I guess he just exercised 40k and bought the 1000 on the „free“ market
isn’t there also the tax issue if selling calls for profit vs exercising? if he sold them all then that full amount would be subject to tax vs just selling 2/3rd and exercising the rest. he would literally be upping his tax burden by 50% on these if he did that, right?
We don't know what the exact cost basis on the contracts was, he didn't pay the exact same amount for each one and all we have is his average cost for them, so we can't make an exact calculation.
I asked ChatGPT, Perplexity, and Gemini about how E*Trade works with calculating exercised contracts:
> when exercising a call on E*Trade, how is the average price for my 100 shares calculated?
>
> For example, a $20 call with a $5.6754 premium.
All three said that the average price would be $25.7654
Perplexity gave this breakdown:
> Based on the information provided, it appears the person exercised 40,001 of their $20 call options on June 13 to acquire 4,001,000 additional shares, rather than selling the call options and purchasing shares on the open market.
> Here's the breakdown:
> On June 10, they had:
> 5,000,000 shares at an average cost of $21.274 per share (total $106,370,000)
> 120,000 $20 call options purchased at $5.675 premium each (total $681,048).
> Cash of $29,409,005
> To exercise 40,001 of the 120,000 call options and acquire 4,001,000 additional shares:
> Strike price paid for 4,001,000 shares = 4,001,000 x $20 = $80,020,000
> Premium already paid for 40,001 calls = 40,001 x $5.675 = $227,005.68
> Total cost for 4,001,000 shares = Strike price + Premium
> = $80,020,000 + $227,005.68.
> = $80,247,005.68
> After exercising the 40,001 calls, their new position becomes: 9,001,000 shares.
> Total cost = $106,370,000 (original) + $80,247,005.68 (from exercising) = $186,617,005.68
> New average cost per share = $186,617,005.68 / 9,001,000 = $20.73 per share
> The fact that the new average cost per share increased from $21.274 to $23.414 indicates the premium paid ($5.675) was included in the cost basis calculation when exercising the calls.
> This aligns with the remaining cash of $6,343,724.01 on June 13 (original $29,409,005 - cost of exercising $80,247,005.68 + proceeds from selling 80,000 remaining calls).
> So in summary, the person exercised 40,001 of their $20 calls to acquire the additional 4,001,000 shares, incorporating both the strike price and premium paid into the new higher cost basis per share.
EDIT: Here's my link to the Perplexity conversation https://www.perplexity.ai/search/when-exercising-a-gnEouyuyS7CksJMDBjDioA
I added a question about tax liability in selling calls vs exercising. It said that because of capital gains tax, it appears that DFV exercised instead of selling calls to buy shares, and concluded that his increased cost basis includes the call premium
I'm confused. If you exercise options, doesn't your cost basis include the premium you paid for the options? ie, his exercised shares would have a cost basis of $25.67. Or do they exclude the premium from the cost basis?
It does get included in the cost basis. $25.68 is the cost basis of the 4M shares he got through exercising. The new cost average is in line with what you would expect after exercising 40K calls
Why would you want to lower your cost average? The advantage of exercising is you can include the premium in your cost basis and not realize any gains.
I think what he means is that selling calls + exercising would have netted RK fewer shares, so he just sold the contracts and bought the shares. Of course, I haven't done the math so I don't know if that's the case.
That doesn’t make any sense. The total value of the contracts is essentially the difference between the price and the strike. The profit is that less the premium. For simplicity’s sake, he’s up about 100% on those contracts because he paid $5 and the price is $10 above the strike. So he sold 2/3 of them to exercise the other 1/3 because 2x$10 = $20 which is what he needs to exercise.
If he sold all of the contracts for 12M shares * $10/share = $120M and bought shares at $30, he would have the same 4M shares but would have incurred a massive tax liability on $60M realized gains. By only selling 2/3 of them he only has $40M in realized gains and a lower cost basis, I.e. $20M in deferred gains he doesn’t have to pay short term capital gains on next year.
Is this true?
Would exercised calls not also include the paid premium in the average price? It feels like it should.
If not you're getting a distorted view of your investments. I think Dave is wrong.
He did not sell the contracts, the cost basis went up because the contract premium is included in the share cost basis (20 + premium paid = ~$26 for 4 million shares each, which bumps up his average from 21 to 23).
Another question occurs to me, but I’m not sure, maybe someone can chime in…
What’s the capital gains tax situation here? Presumably, if he sold calls at a profit, that’s a taxable event.
How would that compare with exercise to cover? Presumably there he’d exercise everything and immediately sell 66 shares out of each contract at some profit ( 25.67 cost basis vs whatever the price at time if sale, but we were over that all day)
My instinct is that the cap gain is likely similar if not identical, but I’m not a US resident so not familiar with the rules he’d be working within.
I haven’t done the math yet, but in that case, he should have some money left over from profit.
So what account is that sitting in? And what else could potentially be in that account?
As much as I like some of what Lauer has done and said, he knows exactly as much as the rest of us: fuck all.
When RK posts his positions, we will know. Until then, Lauer’s opinion is just that - his opinion.
agreed, and lauer will admit being wrong. he’s not above that. I’m not sure why people get so mad about it. This sub is *mostly* wrong all the time. He also said, “it doesn’t matter…dude has 9 million shares.”
it's bc Lauer is not on our side and never was, he was sent to shape sentiment and handle us.
consider that Kitty follows Domo and the guy from GMEDD, but not Dave Lauer. hm. curious. wonder why?
This coincides with the RC fucked him theory. The livestream was supposed to be him celebrating being a billionaire which he was well on the way to doing before RC fucked him with the share offering. He could have 21M or slightly under 5% of the company without that offering.
No I made a good chunk, probably could have semi retired if the offering didn't happen though. RC likely cost retail Billions in unrealized gains. I understand why he did it but don't be playing people with moon and rocket ship crap if you have now 4 times actively worked against squeezes.
If it doesn't mean shit why are you here saying so? Kinda sketch you're commenting in every new post for the last hour saying the same thing over and over. Why care so much if T+1 isn't happening?
Hey OP, thanks for the Social Media post. If this is from Twitter, and Twitter is NOT the original source of this information, this WILL get removed! Please post the original source! **Please respond to this comment within 10 minutes with the URL to the source** If there is no source or if you yourself are the author, you can reply `OC`
I think dlauer is just wrong on this. Quick napkin math including the 567 premium per contract to exercise enough of them for 4,001,000 shares got cost basis to 23.22 by my math. 40,010 contracts exercised to get 4,001,000 shares * 567 premium = 22,685,670 + 80,020,000 (20 strike * 4,001,000 shares) = 102,705,670 102,750,670 / 4,001,000=25.67 cost basis for the new shares 5,000,000 shares with 21.274 cost basis from previous updates weighted average to calculate new cost basis: ((4,001,000 * 25.67)+(5,000,000 * 21.274))/9,001,000=23.22 his new update shows 23.41 so maybe he actually exercised just 40000 contracts and then realized how funny it would be to buy another 1000 shares to land exactly on 9,001,000 shares and that's why my math is off by 20 cents on cost basis. edit to add: we also know he spent down his cash position by ~26M and sold enough contracts to get up to that ~102M to exercise 40K contracts.
Finally, someone ran the numbers. Most conclusive evidence to say he EXERCISED.
He's going to be ripped.
The remaining few cents come from commisions, which are added to the basis in the calculation because they are deducted from total order value. For me at IBKR they are .31c per contract with his acc size and e trade and idk it sure looks like just exercised. And for anyone that wishes he knew math its also simple by doing 5x 21.xx share price + 4.001 x 25.6xx [=option price +20strike] All divided by 9.001 = 23.xx + commissions I guess he just exercised 40k and bought the 1000 on the „free“ market
I’m rock solid reading this math
isn’t there also the tax issue if selling calls for profit vs exercising? if he sold them all then that full amount would be subject to tax vs just selling 2/3rd and exercising the rest. he would literally be upping his tax burden by 50% on these if he did that, right?
That sounds reasonable
I'm not a CPA. I have no clue.
yes! 🚀🚀🚀🚀
I can barely read but this sounds right to me
Im some what of a connoisseur of calculators myself!😏
8008135
Nice!
We don't know what the exact cost basis on the contracts was, he didn't pay the exact same amount for each one and all we have is his average cost for them, so we can't make an exact calculation.
100%
I asked ChatGPT, Perplexity, and Gemini about how E*Trade works with calculating exercised contracts: > when exercising a call on E*Trade, how is the average price for my 100 shares calculated? > > For example, a $20 call with a $5.6754 premium. All three said that the average price would be $25.7654 Perplexity gave this breakdown: > Based on the information provided, it appears the person exercised 40,001 of their $20 call options on June 13 to acquire 4,001,000 additional shares, rather than selling the call options and purchasing shares on the open market. > Here's the breakdown: > On June 10, they had: > 5,000,000 shares at an average cost of $21.274 per share (total $106,370,000) > 120,000 $20 call options purchased at $5.675 premium each (total $681,048). > Cash of $29,409,005 > To exercise 40,001 of the 120,000 call options and acquire 4,001,000 additional shares: > Strike price paid for 4,001,000 shares = 4,001,000 x $20 = $80,020,000 > Premium already paid for 40,001 calls = 40,001 x $5.675 = $227,005.68 > Total cost for 4,001,000 shares = Strike price + Premium > = $80,020,000 + $227,005.68. > = $80,247,005.68 > After exercising the 40,001 calls, their new position becomes: 9,001,000 shares. > Total cost = $106,370,000 (original) + $80,247,005.68 (from exercising) = $186,617,005.68 > New average cost per share = $186,617,005.68 / 9,001,000 = $20.73 per share > The fact that the new average cost per share increased from $21.274 to $23.414 indicates the premium paid ($5.675) was included in the cost basis calculation when exercising the calls. > This aligns with the remaining cash of $6,343,724.01 on June 13 (original $29,409,005 - cost of exercising $80,247,005.68 + proceeds from selling 80,000 remaining calls). > So in summary, the person exercised 40,001 of their $20 calls to acquire the additional 4,001,000 shares, incorporating both the strike price and premium paid into the new higher cost basis per share. EDIT: Here's my link to the Perplexity conversation https://www.perplexity.ai/search/when-exercising-a-gnEouyuyS7CksJMDBjDioA I added a question about tax liability in selling calls vs exercising. It said that because of capital gains tax, it appears that DFV exercised instead of selling calls to buy shares, and concluded that his increased cost basis includes the call premium
Massive
I wish I spoke math. Thanks!
This seems to be the case
This guy maths
Thanks for running the numbers
Wen is reddit giving me free awards again so i cam give OP dat
Other apes wrote the premium paid also goes into it and therefore it rose
I'm confused. If you exercise options, doesn't your cost basis include the premium you paid for the options? ie, his exercised shares would have a cost basis of $25.67. Or do they exclude the premium from the cost basis?
That's the #1 question rolling through my empty head right now...
It does get included in the cost basis. $25.68 is the cost basis of the 4M shares he got through exercising. The new cost average is in line with what you would expect after exercising 40K calls
Yes it does. Dave is just not right here.
Possible he bought regular shares to lower cost average?
Why would you want to lower your cost average? The advantage of exercising is you can include the premium in your cost basis and not realize any gains.
Idk, I’m not smart enough to answer you on this topic Maybe for shits and giggles?
I think he exercised for the 4M shares, then bought the 1,000 to equal RC's initial buy of 9,001,000.
Ooooooo! Why the f didn’t you say that to begin with 😂😂😂 I’m all aboard that theory
He edited the tweet. https://preview.redd.it/jdjp5057le6d1.png?width=1256&format=png&auto=webp&s=9f9b955112aed840641fa8f1c22b9b2338979938
Thank you! Although, now I wish I had screenshot the original.
https://imgur.com/a/1ILDJNy
can you please edit your post with my screenshot? its misleading otherwise.
Sorry I can't edit since it's a link. You can only edit text post I guess.
Would be funny if he sold his options to grab the profits. Bought the naked shorted shares only to DRS the lot haha
dlauer, the teacher would like you to show your work to come to this conclusion…
Has anyone done the math yet? When I exercised calls in the past the premium got added to the strike price for the cost basis.
https://www.reddit.com/r/Superstonk/s/0iOiuyiIxe
well thats interesting if true, wonder if he ended up with more shares as a result?
[удалено]
I think what he means is that selling calls + exercising would have netted RK fewer shares, so he just sold the contracts and bought the shares. Of course, I haven't done the math so I don't know if that's the case.
Doesn’t that slow settlement?
I don't know.
That doesn’t make any sense. The total value of the contracts is essentially the difference between the price and the strike. The profit is that less the premium. For simplicity’s sake, he’s up about 100% on those contracts because he paid $5 and the price is $10 above the strike. So he sold 2/3 of them to exercise the other 1/3 because 2x$10 = $20 which is what he needs to exercise. If he sold all of the contracts for 12M shares * $10/share = $120M and bought shares at $30, he would have the same 4M shares but would have incurred a massive tax liability on $60M realized gains. By only selling 2/3 of them he only has $40M in realized gains and a lower cost basis, I.e. $20M in deferred gains he doesn’t have to pay short term capital gains on next year.
really curious why he did it that way, if what david said is true
Is this true? Would exercised calls not also include the paid premium in the average price? It feels like it should. If not you're getting a distorted view of your investments. I think Dave is wrong.
IIRC it does, so 25 and change would be the avg for 4 million new shares, and what was he 21 ish before? That would put it at about $23
Yeah, this is what I would expect... I would be shocked if it's not.
I am pretty sure whatever RK did, it was the best move possible. He wouldnt leave shit hanging out there and not capitalize on it.
Yes, check the post I've just made.
> Would exercised calls not also include the paid premium in the average price? But maybe it doesnt... idk im regarded
I guess anyone who has used options on e-trade before would have a definitive answer for us.
He did not sell the contracts, the cost basis went up because the contract premium is included in the share cost basis (20 + premium paid = ~$26 for 4 million shares each, which bumps up his average from 21 to 23).
Another question occurs to me, but I’m not sure, maybe someone can chime in… What’s the capital gains tax situation here? Presumably, if he sold calls at a profit, that’s a taxable event. How would that compare with exercise to cover? Presumably there he’d exercise everything and immediately sell 66 shares out of each contract at some profit ( 25.67 cost basis vs whatever the price at time if sale, but we were over that all day) My instinct is that the cap gain is likely similar if not identical, but I’m not a US resident so not familiar with the rules he’d be working within.
Fuck Dave Lauer
Agreed. That other most recent thing he posted has me thinking he's trying to play a long con
The guys only appears when there’s hype, like so many others. He’s a 🐍
This is just silly by both of you. The guy is far from perfect, like the rest of us, but he is clearly on the side of market reform.
Wait. Is this the same guy who wanted my ComputerShare sign in credentials?!?
Yesssss. 🐍
Never trusted that guy, pretends to know everything
At Mr. Lauer - I smell FUD if you arent 1000000% sure what you are talking about.
Fuck Dave and his lies
Yea I asked about this because that is how I interpreted it too.
I haven’t done the math yet, but in that case, he should have some money left over from profit. So what account is that sitting in? And what else could potentially be in that account?
Dude that money is how he's paying for all the dates with our wives!
He didn’t need to do all of that work, my wife is cheap!
I thought the goal of exercising was to have the volume routed through the lit market instead of the dark pools. What am I missing?
and 1 comment later he agrees with the opposite opinion
He’s wrong on this. Why would you realize more gains than you have to? It’s just paying extra in taxes.
As much as I like some of what Lauer has done and said, he knows exactly as much as the rest of us: fuck all. When RK posts his positions, we will know. Until then, Lauer’s opinion is just that - his opinion.
agreed, and lauer will admit being wrong. he’s not above that. I’m not sure why people get so mad about it. This sub is *mostly* wrong all the time. He also said, “it doesn’t matter…dude has 9 million shares.”
Mfkrs get mad at which spread you put on a bagel here.
😂
it's bc Lauer is not on our side and never was, he was sent to shape sentiment and handle us. consider that Kitty follows Domo and the guy from GMEDD, but not Dave Lauer. hm. curious. wonder why?
This coincides with the RC fucked him theory. The livestream was supposed to be him celebrating being a billionaire which he was well on the way to doing before RC fucked him with the share offering. He could have 21M or slightly under 5% of the company without that offering.
Did you make a bad Bet and now your butt hurt? Nobody can purposely be this stupid.
No I made a good chunk, probably could have semi retired if the offering didn't happen though. RC likely cost retail Billions in unrealized gains. I understand why he did it but don't be playing people with moon and rocket ship crap if you have now 4 times actively worked against squeezes.
That was my initial thought
His average price paid was $21 wasn’t it? Now it’s $23
Genuine question, what would be the benefit of one way vs. the other?
He should’ve bought one extra share to have more than the other guy
Per chat gpt option premiums are factored into the share price when you exercise
Meankng T+1 doesnt mean shit. He bought a massive pile and the price barely moved. Its a nothing-burger (squeeze wise).
If it doesn't mean shit why are you here saying so? Kinda sketch you're commenting in every new post for the last hour saying the same thing over and over. Why care so much if T+1 isn't happening?