How to Handle Short Positions
To record a short position, simply record a sell transaction first. While
the short position is open you will own a negative number of shares. If
the share price of the security goes down, your investment value will become
less negative, thus the value will be increasing. When the position is
closed, record the corresponding purchase.
To keep your total portfolio value correct, use the
default cash account option
and transfer the proceeds of your initial sell into your cash investment.
Example Short Position
Assume we've shorted 100 shares of IBM at $90/share. Record a sell of 100 shares
at $90 in a IBM investment. Assume you've specified a default cash account
under the Portfolio Properties Dialog called CASH. Your cash account will
increase in value by $9000. The total change in your initial portfolio
value is $0, as the value of your IBM investment is $ -9,000. If IBM goes
down to $80/share, your portfolio will increase in value by $1,000, as the cash
account still has a plus $9,000 value, and the IBM value will have increased to
$ -8,000. When you close the short position, record a purchase of 100
shares of IBM, for the amount you paid to buy back the originally shorted
shares.