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1
vote
1answer
67 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
1answer
95 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
48 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
129 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
92 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
42 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
278 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
132 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
209 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
98 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.
0
votes
4answers
187 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
1k 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 ...