Questions tagged [covered-call-writing]
A covered call is an options strategy where an investor holds a long position in an asset and writes (sells) call options on that asset to generate an income stream. A covered call is also known as a "buy-write".
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Am I buying back my same covered call I wrote?
So I understand that a recommended strategy when selling Covered Calls is to buy it back before it expires.
What I'm unclear on is am I buying back the exact Covered Call I wrote? Or is it someone ...
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Poor Man Covered Call Trade Selection and Set up
I did some learning on the PMCC strategy and thinking to implement it on SPY.
As the reading materials urged I have been trying to make sure the initial set up long ITM LEAP at around 0.8 delta, and ...
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Suggestion to recover from a bad naked call
I sold a Jan 2026 CRWD $140 Call, and now the price skyrocket to 235 (I know, bad move)
How do one usually get out of this situation?
Many thanks.
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How to trade stock e.g, BABA using monthly options (wheel strategy)?
Say you want to buy up to 400 shares of BABA in the current $130 range to $100. How do you implement an option strategy in the meantime to make some extra cash while waiting for a $10 stock gain?
Buy ...
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Covered call buy-to-close using sale of underlying?
If I write a covered call, my account will be long the underlying and short a call. Say I withdraw the premium from my brokerage account and spend it, invest it elsewhere, etc.
If I want to later sell ...
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How to manage covered call position when stock price goes down
So let's say you have a position like this
bought 100 shares of XYZ at $50
sold 1 covered call at $55 strike, received a premium of $2
stock price goes down to $35
now premiums for strike prices ...
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What Nifty 50 ETFS in India allows covered calls? [closed]
I want to buy a Nifty ETF such as SBI-ETF Nifty 50 or Nippon India ETF Nifty BeES but I am not able to figure out if these ETFs allow for covered calls to be written. Can members guide me which of ...
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Stock Trading Question - Covered Calls
My understanding of covered calls is that if I sell call options for a stock that I own and the price of the stock rises, I would have to sell my shares.
What stops me from putting a limit buy order ...
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Covered call help
I sold a covered call and received the premium right away.
Question is the call now is the money and my total return shows negative. If when this call gets called away or close by expiration date does ...
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Can a buy order be skipped when price rises rapidly?
I would like to know, if it is possible or likely, that an "out the money" share buy order would be skipped, when a stock prise rises very rapidly.
Context:
I have 466 shares of tesla. I ...
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How to hedge/protect my stocks that do not have an option chain?
I've recently invested in a couple of OTC stocks (1st time exploring the OTC market) and unfortunately there's no option chain available. Question is, how can I protect those stocks in particular from ...
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Can I hedge on a long position of less than 100 shares and if not is there an alternative strategy?
Good Afternoon All,
Quite frankly I'm stumped. I am aware of a covered position under normal circumstances, however in this particular situation there are less than 100 shares and I'd really like to ...
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Does closing an unqualified covered call option result in realization of gains on the underlying?
In general, in a covered call scenario, does any trade on the options contracts trigger a realization of capital gains on the underlying? I am not concerned about the reset of the holding period on ...
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Losing money on a deep In the Money call
Suppose that I sold a call option at $1/share on XYZ at a strike of $100.
The holder of the call exercised the option when the market price of XYZ is $110.
Now I need to buy 100 shares at $110 and ...
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Tax on unassigned Covered Call premiums deferrable by reducing cost basis?
I recently started selling covered calls and was curious how USA taxes for premium collected on unassigned covered calls worked. I was under the impression that such premiums will classify as short-...
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Buy Stock and immediately sell a call
I am new to options trading (<1 month). I recently sold a rental unit and I have been slowly allocating the cash into stocks. I want to utilize options and I need some help to make sure I am not ...
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Why do people exercise call options at a loss?
I sold some call options for $2.55 premium at strike price of $130. At expiration, the market price was $130.55. I thought the option was not deep in the money and at a loss of $2, hence I didn't ...
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Selling covered calls does not make sense
I have one bitcoin and was thinking about selling call while owning the asset.
However after some pondering I came to the conclusion that if price drops then the strategy can only be performed one ...
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Taxing Capital Gains in an Earlier Year
I know I will have a large $70,000 capital gain in the beginning of 2020 (due to my selling deep-in-the-money covered calls which will expire, and therefore get exercised, in January). Would the IRS ...
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When should a covered call option be bought back to avoid assignment
I am trying to learn options. I sold a covered call (weekly option) that will expire on October 25th and I want to avoid being assigned.
Should I buy it back on 24th (one day early) or can it be ...
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I sold call options that expired ITM. Why were they not exercised?
I sold two covered call positions that expired Aug 9. Both expired ITM.
The 1st one's strike price was $3.00. At expiration, the stock was $3.13 so 13 cents ITM (6 contracts).
The 2nd one's strike ...
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basis adjustment on wash sale on underlying or option
Transaction1: I bought 200 QQQ ( ETF) at about $160 in Jan 2019, paying out about $32k
Transaction2: I sold two calls on QQQ ( QQQ190628C00170000 ) for expiring on June 28, 2019 for a strike price ...
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Approach to roll down a Covered Call
If I sell a covered call and the stock declines some time before expiry, what would be a strategic approach to roll down the call to protect the downside, or are there any other approach to do it? Do ...
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Deep in the money Covered Calls with high premiums
Take a look at following option chain, it's for some company in Indian markets,
I intend to do a covered call on the stock but I would want a little extra downside protection at the cost of little ...
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Confusion about options: can one exercise at any time?
I am at the beginning of learning about options. I am reading a book on the subject. I am in a chapter about selling covered calls. The book says:
Defensive covered call writers may prefer the ...
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Are there different markets between option writing and buying?
Looking at the option chain I see short term (30 days) deep out of the money calls with volume for strike 55 with volume at 16, with Bid/Ask at 0.30/1.00:
However, the time and sales window notes two ...
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Consequences of writing a covered call below your cost basis?
If you are holding a stock bought for $40 with a current price of $35 and decide to write a covered call at $39, does anything different happen than if you were to write the call at $40?
At $39, ...
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Can I withdraw proceeds from covered call selling?
Suppose I have the funds to buy exactly 100 shares of SPY in a regular, taxable (i.e. not 401K or IRA) account. I then sell at or in the money covered calls one year out, say Jan 2019 calls. This ...
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Why would someone want to sell call options?
I'm having trouble understanding why someone would want to sell call options. For example, if the writer of a call option owned the shares and they expected the share price to fall, why wouldn't they ...
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Settlement of Shares Underlying a Covered Call Option
If I buy 100 shares of XYZ stock one or two minutes before selling one XYZ call option, would this call option be considered "covered", or would it be considered "uncovered" until the 100 shares ...
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Price of a call at expiration
I have a covered call that is going to expire in 15 minutes. It's $1.30 in the money. I'd expect with no time value left, the price to equal the intrinsic value ($1.30). However, it's still valued at $...
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How are option contracts assigned?
If I'm short a call, and the contra exercises their option, how is that assignment tracked back to me?
Is the other side of my contract tied to a specific buyer? How does the OCC know to assign my ...
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Stocks, Options, and Income Tax
It is my understanding that if an investor owns a stock and sells a qualified covered call then dividends from the stock are still qualified. However, if an investor owns a stock and buys a put option ...
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What happens when a calendar spread is assigned in a non-margin account?
A well-known option investment strategy is the so-called "calendar spread", which involves buying and selling options on the same stock with different expiration dates. If the strike prices are also ...
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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 ...
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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?
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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). ...
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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 ...
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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 ...
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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.
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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 ...
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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 ...
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