Since I have been tagged:
- Based on your facts, it appears that you are the seller of the call since you indicate that you are receiving a premium.
- I agree that what you have is a contingent liability (other liability, etc).
The accounting would be as follows:
Dr. Cash $100
Cr. Call Liability $100
To record the premium received for call option
Dr. Call Liability $100
Cr. Income (gain) $100
To record expiration of call option
The accounting gets trickier if the seller has to make good on the call.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
