Why does selling covered calls result in a negative balance in my account?

Question

When I sell covered calls I see the balance that I was paid (the premium) represented as a negative number under the "options" section of my balances. Why? It makes sense to me that the premium would be assumed mine (not a debit or something I'm waiting on).

Answer 1

You are short the call. It is a liability that you must satisfy and therefore the Market Value is negative.

Here's an example that might be an easier way to understand it. You sell a call for $10. Assuming no commissions and fees, $1,000 is deposited into your account. Your cash balance increases by $1,000. Has you account value gone up by $1,000? No, because if the call's price is still $10, it's a $1,000 liability. That is how much it would cost for you to buy it back. Plus $1,000 and minus $1,000 equals zero and therefore your account value is unchanged.