General Information. When you open a short option position, your account will be credited the premium of the option less commissions. However, to account for the position, brokerage firms generally show the short option as a negative in the account, essentially subtracting the market value of the call from the account net worth. Consider buying stock: you do not immediately make the amount of the purchase. Rather there is a debit in the account equal to the cost of the stock plus commissions. If you started with $5,0. The account value is still $5,0. When shorting options (like a covered call), you are credited the proceeds and debited the option value. If the option eventually goes worthless, this debit would become zero. If you did not subtract the short option from the value of the account, the value would appear inflated. ![]() To prevent this, subtract the market value of the short option from the account net worth. The proceeds from the option are generally available to use for other investments or to remove from the account. Discuss this further with your broker as we can only generalize how they may be accounting for your positions. Was this content helpful?
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