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Questions tagged [covered-call]

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6 votes
1 answer
5k views

Can closing a covered call and opening a new covered call trigger a wash sale?

In Jan 2019, I bought 200 QQQ (ETF) at about $160 and also wrote two covered calls for June 2019 at 170 (higher than the last day price) netting a small premium. Now QQQ is at about 185 so it will be ...
0 votes
1 answer
2k views

Understanding the taxes on covered call ETFs (e.g., QYLD, RYLD and XYLD) whose dividend payments count as ROC: short-term or long-term capital gain?

As a US taxpayer, I am trying to understand the taxes on covered call ETFs (e.g., QYLD, RYLD and XYLD). From projecttheta, with QYLD as the example: Almost all of QYLD’s dividend payments have ...
0 votes
2 answers
297 views

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 ...
0 votes
2 answers
297 views

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.
8 votes
4 answers
2k views

Am I doing the math for this covered call/long put strategy correctly? What risks do I run with this strategy?

In this trade, I write an in-the-money covered call and buy an in-the-money put (as an example) on GM, expiring in September 2014. The call premium is $10.02 with a strike of $26, and the put premium ...
1 vote
3 answers
5k views

I was denied a margin account for being unemployed, what should I do?

I'm in Canada, and encountered something very strange in the last few months: my mother and I each opened an individual (not joint) discount brokerage account at HSBC InvestDirect. We both deposited $...
-1 votes
1 answer
128 views

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 ...
0 votes
1 answer
504 views

How not to pay taxes on covered call

I bought 100 shares of ESPO four months ago for $50 and sold a September 18 $62 covered call at Robinhood. With the stock trading at $61.50, I think that it's likely that I will be assigned. I will ...
1 vote
2 answers
713 views

Borrowing share with a covered call for short?

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 ...
3 votes
1 answer
251 views

What is QYLD ? (NASDAQ: QYLD)

What is QYLD ? Please explain it to me. From my understanding QYLD is similar to ETF. But how do they make money ? How can they pay so much dividend ? I read this and still have no idea, can somebody ...
13 votes
4 answers
12k views

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 ...
1 vote
2 answers
170 views

What happens to the 100 shares if someone "sell to close" their call option position?

Allow me to explain. Let's say I sell 1 covered call and receive the premium. When I sell a call, I am assuming that someone on the other end would have bought my call (say Nora). If the share price ...
1 vote
1 answer
106 views

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 ...
0 votes
1 answer
686 views

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 ...
1 vote
0 answers
180 views

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 ...
0 votes
4 answers
108 views

Selling Covered Calls p/l

I recently entered the options trading market to start generating a passive income on stocks I intend to keep for the foreseeable future. I entered a position on a pharma play with 100 stocks @ $2.70 ...
0 votes
2 answers
811 views

Writing call options, when do I receive premium?

I own 100 shares of a stock and I would like to get into writing covered calls. I'm just curious: If I write a contract, do I immediately receive payment for it from my broker? Or do I have to wait ...
1 vote
1 answer
139 views

Buying To Cover And Protecting Profits from Short Sell

I sold covered call options, and I would like to buy to cover when the market opens on Monday. For this particular instrument, trading volume is a bit thin, and I would like to "hide" my ...
1 vote
1 answer
54 views

Is there capital loss on called shares

I bought 100 shares of XYZ at $12.35 for a total cost of $1,235. I then sold an $11.50 call for $1.15, collecting $115. If assigned, will my sale price for the 100 shares be $1,150 realizing an $85 ...
0 votes
1 answer
120 views

Should I sell to open or sell to close

If I have inherited stocks through employer provided stocks (RSU). I haven't ever placed a "Buy to open" trade. If I want to sell a CALL option and place a trade (say current stock price is $...
0 votes
1 answer
2k views

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 ...
1 vote
4 answers
3k views

Buying back a covered Call

Consider a situation where an investor owns a stock for over a year and sells calls against it that expire in about 90 days. You can assume that this is a qualified covered call for tax purposes. ...
3 votes
2 answers
906 views

Is there something like a covered call for futures?

I am making my first baby steps in learning about future contracts. In the option market there is something like a covered call, where one can limit the upside risk to the loss of the shares one ...
1 vote
2 answers
232 views

What happens to the put option (longer expiration) of a collar if the call gets assigned?

Assuming a collar strategy where I buy the underlying stock with a short call and long put option on it. Would the call be assigned away like a covered call, leaving the put option viable or would the ...
2 votes
2 answers
359 views

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 ...
0 votes
1 answer
261 views

Withdraw a covered call premium right away

Let's say that I have $50k in my brokerage account. My broker will let me buy double my account's value on margin. I can buy 100 shares of TSLA at $820 per share and then sell a one year covered call ...
2 votes
2 answers
103 views

Covered calls - can anyone confirm if my understanding is correct?

I hope that it's appropriate to ask this kind of question here and I'm not sure how to formulate it. I have a specific (real) example that I'd like to outline to see if I understand this correctly. ...
1 vote
1 answer
2k views

Can I select lots for exercised covered calls on transferred shares where I'm tracking the cost basis?

I wrote covered calls against multiple lots of company A stock, each lot with a different cost basis. I originally bought the shares through eTrade, later transferring them to Vanguard. Only a portion ...
0 votes
1 answer
220 views

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 ...
0 votes
1 answer
82 views

Covered call buy back

I sold a covered call for $1000. If I buy it back for $5000 before the expiration date, will the $4000 considered a short term loss and will it offset my short term gain and long term gain? I do not ...
2 votes
1 answer
54 views

what are the "mechanics" of a covered call in terms of dealing with the broker?

Besides the theory of the covered call, how does it actually work with the broker? Senario, suppose I own 100 shares of the stock, now I am going to sell 1 call option on the stock for the purpose of ...
0 votes
1 answer
89 views

Help understanding Collar strategy

Could someone explain the drawbacks of this option collar strategy on PPL? It looks to me that there is minimum risk. I use Robinhood for my trades and pay no commissions/fees. Buy 100 shares for $...
0 votes
1 answer
107 views

What to do with a call I sold

I own 300 shares of NCLH, I sold a call last Monday with strike price of $16 when the stock was at $15.8 for a premium of $115 (for the 3 calls). The Call expires tomorrow and I don't know what I have ...
0 votes
2 answers
337 views

Is an ITM option bought/sold to close in addition to being assigned?

I'm a little unclear on what happens to in-the-money options on expiration. I know the option will get assigned, but does it also need to be bought/sold to close? For example, say I sell a covered ...
0 votes
3 answers
330 views

New to options trading and need help understanding an options spread risk graph. What am I missing?

Suppose the stock is $41 at expiry. The graph says I will lose money. I think I paid $37.20 for (net debit) at this price. I would make money, not lose. What am I missing? Thanks for all your input, ...
2 votes
0 answers
75 views

Can companies raise cash by selling covered call options on their treasury stock?

Suppose a company has lots of treasury shares. Can it raise cash by selling call options covered by the treasury stock? If the stock price ends below the strike price of the calls sold, then the ...
2 votes
1 answer
62 views

What category is the following: Naked call or covered write

I would like to do the following: Just before market close on a Monday, buy 100 shares of X and simultaneously sell 1 X call option deep ITM. I have sufficient funds in my account to buy 100 shares ...
-2 votes
3 answers
1k views

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 ...
3 votes
5 answers
5k views

Why naked call writing is risky compare to Covered call?

I know that with a covered call you own the underlying and sell a call and with a naked call you don't own the underlying. Either way, if the underlying finishes in-the-money, you are assigned and ...
1 vote
3 answers
6k views

What are my risks of early assignment?

I have started writing covered puts and calls recently. Everything I read talks about the risk of early assignment of your position, but I don't really understand how often this happens. It seems that ...
2 votes
1 answer
273 views

How to reduce margin requirement when shorting calls?

When I naked-call (short) cash-settlement options, like VIX, the margin requirement is very high. I tried some spread strategies to protect (e.g., buy same-expiration call at a higher strike), but ...
2 votes
2 answers
183 views

CELG Covered calls with BMY Acquisition

I have 700 shares of CELG but have written January 2021 100 strike calls against my shares for 5-6$. If CELG closes the acquisition below 100$, would I receive the premium I sold the covered calls at ...
2 votes
1 answer
2k views

Tax implications of rolling covered calls

I have friend who is using the covered call options. Some time these covered calls are near assignment and then my friend rolls these calls with higher strike price. What are the tax implications ?
1 vote
3 answers
304 views

How to buy a contract for S&P 500 index?

I am researching writing covered calls on S&P500 index. So in order to sell covered call I need to buy a contract for S&P500 index. I've never traded indexes. What exactly I will be buying (...
1 vote
1 answer
115 views

Covered call on stock held for different periods

Say I have 10000 shares of some stock X. Say 5000 of them were bought 2 years ago and the other 5000 were bought a month ago. These two batches would have different amount of gains and different tax ...
1 vote
2 answers
1k views

Is it profitable to roll an ITM covered call

I sold a covered call at 50, with the stock currently trading at 53, and only a few days to expiration. I can roll out the call for 1.30 credit, but that's less than the in-the-money amount, so it ...
1 vote
1 answer
829 views

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 ...
2 votes
1 answer
2k views

Risk of selling stock cash secured puts and covered calls

I'm trying to determine what the potential downside is for selling call and put options, aside from the obvious loss of money if the stock moves past the strike price of the call or put sold. Right ...
0 votes
2 answers
5k views

Why hold calls until expiration?

I am reading a book on options basics. I am in a chapter on selling covered calls. The author says that buyers of calls almost always hold the calls until expiration. Why is this? Here's how I ...
2 votes
1 answer
97 views

Can I get an assignment notice as soon as I sell a covered call

If I sell an American style ITM covered call, then in theory, can I get an assignment notice as soon as I have sold the call, since the counterparty can opt for early exercise? Does this ever happen ...