Hi Satish, if you use +4, you are looking at the short option from a cashflow perspective (i.e. receiving +4 for selling the option). In my workings, I look at the market value perspective (or a balance sheet view), where asset is positive and liability is negative. Since the short option is a liability, hence I write it as -4. Both methods can be used, just have to apply it consistently.
No one could have explained much better than this. Really appreciate.
No problem, Venkat
Happy I've found this.
awesome explanation thanks a mil!!
Why is the short call at premium -4 and not +4 @1:52 , i couldn't understand that part .
Hi Satish, if you use +4, you are looking at the short option from a cashflow perspective (i.e. receiving +4 for selling the option).
In my workings, I look at the market value perspective (or a balance sheet view), where asset is positive and liability is negative. Since the short option is a liability, hence I write it as -4.
Both methods can be used, just have to apply it consistently.
Thank you so much helped a ton ! ❤️