How do you calculate Adjusted Cost Basis (ACB) for options?

Adjusted Cost Basis is calculated by tracking all the cash you have spent or received during a specific trade campaign.

The formula is: Total Share Cost − Total Net Premiums Collected = Total Adjusted Cost. Find the ACB per share by dividing that number by your total shares held.

For example, if you sell a put for $200, take assignment on 100 shares for $10,000, and sell a call for $150, your True Share Cost is $10,000. Your Total Premium is $350. Your Adjusted Cost is $9,650, which gives an ACB per share of $96.50.

You should update your ACB every time you collect additional premium. If you then sell another covered call for $100, your new ACB drops to $9,550 or $95.50/share.