The tag has no wiki summary.

learn more… | top users | synonyms

0
votes
0answers
94 views

Is it a safe strategy to protect a high dividend stock with a collar?

I want to find a few high dividend paying stocks (~10% yield) for my tax sheltered portfolios. I also want the stock to be reasonably safe. I am looking at this list. Problem is, I don't know how to ...
1
vote
1answer
41 views

What is the risk in capturing dividends using a covered call?

I am looking at this example to capture dividends using long stock and covered call. What is the risk in this strategy? There is no delta risk, since the position is delta neutral. So it seems like ...
1
vote
1answer
49 views

Covered call vs naked put in online brokerages

If a covered call has same risk profile as naked put, how come brokers allow covered call but only allow naked puts to experienced traders?
1
vote
2answers
145 views

Can a Covered Call be called away before the expiration date?

Scenario: If I hold 100 shares of XYZ, I can sell 1 XYZ call. Let's say the current price of XYZ is $50. What if I sell a call with strike price $45? Does that mean the underlying owner can call away ...
1
vote
2answers
161 views

What are some ways to mitigate the risks of covered calls?

When covered calls work, they seem great. However, there is a chance that the stock will tank, turning the 5% profit into a 50% loss. What are some ways of mitigating the risk of a stock dropping ...
0
votes
1answer
53 views

Is there an equivalent of writing calls on personal real estate holdings

Where possible I like the ability to write calls on the underlying asset for the residual income in a low-medium volatility environment Is there the equivalent of doing this with real estate? I am ...
4
votes
1answer
235 views

Whats the difference between a qualified and an unqualified covered call?

I own various shares that I want to start writing covered calls on but I've heard about differences between "qualified" and "unqualified" covered calls. What's the difference? All I can find is that ...
2
votes
2answers
105 views

What is the rationale behind brokerages establishing tiers/levels for options trading?

I'll preface this by saying that my experience in this field is limited, so bear with any abuses of terminology. I understand the rationale behind FINRA's "Know your customer" and suitability rules ...
-1
votes
1answer
48 views

Selling the underlying in case a covered call is exercised?

If I sell an out-of-the-money covered call and the option becomes in-the-money prior to expiry, then am I forced to sell my underlying at the strike price (assuming the counterparty decides to ...
3
votes
3answers
704 views

When writing a covered call, what's the difference between a “net debit” and a “net credit”?

My brokerage account (Fidelity) gives me two choices when writing a covered call: net debit and net credit. What's the difference between these two choices? For example, take DRRX (share price $1.4). ...
2
votes
3answers
157 views

What is a good price to “Roll” a Covered Call?

For an already initiated Covered Call, I wanted to ask if there is an optimal price to roll? For instance, if I buy/write a stock worth $10 with a strike price of $12, I can be faced with 3 scenarios ...
5
votes
3answers
266 views

How does the process of “assignment” work for in-the-money Options?

Consider the following scenario - I have a covered call for XYZ for this month's expiration as XYZ May 18 25 Call. On May 18, XYZ is trading for $28, with the option listed above at $3.3. If I ...
2
votes
2answers
100 views

How can I figure out when I'll be able to write call options of a stock?

I have a 200 Zynga shares. I'm wondering when I'll be able to write call options? I see Groupon has options on it, but Pandora does not, so it seems it must not be just time.
1
vote
4answers
208 views

Covered call when stock position is at a loss

when writing covered calls and the stock value decreases. Sure your calls decrease to $0 and expire worthless (the desired scenario) but your stock position can continue taking a greater loss. so ...
8
votes
1answer
2k views

How are proceeds from writing covered calls taxed?

When I sell call options based on an underlying security that I own (covered call writing), how are the proceeds treated fro tax purposes? As ordinary income? As a short-term capital gain? Is ...