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I was wondering if I could increase the premium from my long term hold by providing them to my broker as a short sale stocks?

My main question is that are there any implication on the fact that I mostly have covered calls on my long holds.

I presume that if my call gets called I can just pull the share back without any implications? Is this correct?

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If your broker provides rebates for borrowed stock and your stock is one that is in demand for borrowing then yes, you can increase the return on your long positions by providing them to your broker for lending to those who wish to short stock.

A covered call has nothing to do with this. If a lender sells his stock directly or the stock is sold because a short covered call is exercised, the broker must find replacement stock for the borrower. That has nothing to do with you, ergo "pulling the stock back." There are no implications to you. You don't have to do a thing.

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No, if your stock is called away, the stock is sold at the agreed upon price. You cannot get it back at your original price. If you don't want your stock to be called, make sure you have the short call position closed by expiration if it is ITM.

Also you could be at risk for early assignment if the option has little to no extrinsic value, although probably not. But when dividends are coming, make sure you close your short ITM options. If the dividend is worth more than the extrinsic value, you are pretty much guaranteed to be assigned. Been assigned that way too many times. Especially in ETFs where the dividends aren't dates are not always easy to find. It happens typically during triple witching. If you are assigned on your short option, you will be short stock and you will have to pay the dividend to the shareholder of your short stock. So if you have a covered call on, and you are assigned, your stock will be called away, and you will have to pay the dividend.

  • I think you misunderstood his "pull the share back." He meant pull it back from the broker's usage of it for shorting, to deliver to the call exerciser. – feuGene Apr 13 '17 at 1:33
  • Yep you right Austin. I am selling covers on the level where I would only be happy in case I would be called – Kimmo Hintikka Apr 13 '17 at 3:00
  • This answer is wrong for multiple reasons. 1) You are at risk for early assignment if an ITM option has little to no extrinsic value (Discount Arbitrage). No one bothers with near worthless OTM options. 2) The dividend being worth more than the extrinsic value of an ITM put presents the early assignment opportunity, not the call (Dividend Arbitrage) 3) You NEVER have to pay out the dividend if you are assigned on a covered call and the stock is called away. That only applies to shorting stock, either directly or being short the stock from being assigned on a naked call. – Bob Baerker Sep 20 '18 at 20:44

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