How to Handle Selling Puts
Create a new investment to
track the put. When you sell a put, record a sell
transaction in this investment. To keep your total
portfolio value correct, use the default cash account
option to transfer the proceeds of your sell into your
cash investment. While the put is outstanding, update the
put's investment with the price as desired. Since you
will own a negative number of shares in this investment,
as the price goes down, your total portfolio value will
increase, or if the price goes up, your portfolio value
will decrease.
There are three
possibilities on how the position will get closed:
- If the put expires,
record a purchase in this investment at a price
of $0/share to close the position.
- If you decide to
repurchase the put, just record the purchase at
the price you paid to buy back the option.
- If the shares are put to you, record a purchase in the put
investment at $0/share, as well as a purchase in the underlying
stock's investment at the option price.
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