Comment on Basics on Options Shorting/Writing

Abhishek commented on 18 Mar 2014, 02:17 AM

Hello Nitin,

Let’s say I write a May 6000PE and buy an April 6100PE, with the Nifty spot at 6500. Let’s say the Nifty falls by 400 points in a couple of weeks. How will the MTM work for my position? I would make a gain on my long position, but would be making a loss on my short position. Do you net the two positions together? Or would I have to add the entire amount of the loss into my account to continue to hold my short position?

Abhishek

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