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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 ...
fundmakesell's user avatar
12 votes
4 answers
964 views

Covered Call Writing - What affects the price of the options?

A little while ago, I bought $800 worth of stocks and sold about $200 worth in call options against the stock. I think it was 200 shares and 2 contracts (so my options weren't naked). That takes the ...
Matthew's user avatar
  • 221
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 ...
Michael A's user avatar
  • 1,958
7 votes
1 answer
108 views

Premium classification when selling covered calls in a traditional IRA?

If I sell covered calls within a traditional IRA, then is the premium considered a contribution or a capital gain and can I withdraw that money?
user avatar
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 ...
riya's user avatar
  • 1,245
5 votes
3 answers
3k views

Covered calls: How to handle this trade?

I bought XNPT (Xenoport) a couple of weeks ago at 6.93 I turned right around and sold the Apr 16 call. $8.00 strike and collected 1.50 in premium. Today I get a great surprise that XNPT has rocketed ...
Jane Wilkie's user avatar
5 votes
2 answers
8k views

Brokerage Fees for Covered Call Options

I have been doing some research and am thinking of selling a Covered Call on a stock I currently own and am planning on holding long term. I would like to make an Out-of-the-Money Covered Call (OTM CC)...
Greg Bray's user avatar
  • 183
4 votes
2 answers
536 views

Rules for Broker Behavior with Covered Calls

When selling covered calls, there are a couple of things a broker could do if the stock has a sharp increase. Here's an example: Buy Stock: $100 Sell Call $120@1month: $1 Two days later, the stock ...
Benjamin's user avatar
  • 829
4 votes
1 answer
258 views

How can I sell INTEL covered calls?

As shown in this picture, how do I execute the strategy highlighted in yellow? I am based in the UK. Source: http://seekingalpha.com/article/274231-intel-dividend-champion-in-the-making (10/6/11)
user avatar
4 votes
2 answers
1k views

Calculating profits on a covered call. What method do you use?

Hey guys. I was having a discussion with someone about calculating profits on covered calls and I thought I'd ask the community's advice on which way is correct. I buy.... - 100 shares of XYZ at $7....
Jane Wilkie's user avatar
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 ...
k31453's user avatar
  • 79
3 votes
4 answers
370 views

What are your experiences with 'self directed' 401ks?

Some background: have no plans to leave current company anytime soon, so (short of borrowing against my 401k balance to invest outside the 401k) I can't get the funds out want to max out my 401k ...
Jon S's user avatar
  • 1,348
3 votes
1 answer
255 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 ...
slllllllls's user avatar
3 votes
1 answer
1k views

Sell covered call on an index option

When I trade an index option (SPX), there is no actual trading going on in the underlying (as opposed to SPY). But some option strategies (like covered call) by definition require a position in the ...
Victor123's user avatar
  • 16k
3 votes
2 answers
960 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 ...
Juergen's user avatar
  • 135
3 votes
1 answer
832 views

Selling Covered Calls, will online broker sell shares automatically?

Let's say I own a share of a company at $100, and I sell a call option for this company for $5 with a 6 month expiration, and a strike price of $110 (all arbitrary numbers). If the share price rises ...
fileyfood500's user avatar
2 votes
2 answers
369 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 ...
user1721135's user avatar
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 ...
schizoid04's user avatar
  • 2,745
2 votes
1 answer
5k views

Robinhood covered calls

If i buy 1 call option and then sell 1 call option. Is that classified as covered? I don't actually own the shares, i just own an option to buy them. Robinhood allows me to do this even though i dont ...
rainhamtown's user avatar
2 votes
1 answer
63 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 ...
DownUnder's user avatar
2 votes
1 answer
283 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 ...
I Wonder's user avatar
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 ?
Raj's user avatar
  • 3,492
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 ...
Victor123's user avatar
  • 16k
2 votes
2 answers
1k views

how do I calculate rate of return on call options that are spread

I want to do a leap spread on an existing covered call option. How do I calculate the rate of return to determine if it's worth doing the leap spread?
doode23's user avatar
  • 21
2 votes
2 answers
104 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. ...
Aaron Shaw's user avatar
2 votes
1 answer
55 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 ...
unsupervised's user avatar
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 ...
Danny's user avatar
  • 21
2 votes
0 answers
79 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 ...
Flux's user avatar
  • 17.1k
1 vote
2 answers
198 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 ...
Rishab Gupta's user avatar
1 vote
3 answers
307 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 (...
GemStone's user avatar
  • 111
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 $...
user2213307's user avatar
1 vote
3 answers
137 views

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 ...
mcs's user avatar
  • 11
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 ...
Spig's user avatar
  • 769
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. ...
Bob's user avatar
  • 1,711
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 ...
Buğra Gedik's user avatar
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 ...
alekop's user avatar
  • 595
1 vote
2 answers
729 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 ...
Kimmo Hintikka's user avatar
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 ...
WU-TANG's user avatar
  • 179
1 vote
1 answer
833 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 ...
user avatar
1 vote
1 answer
107 views

Buying Covered Calls

I am reviewing trading options. I'm looking to sell some shares of 2 companies but from what I am reading it may make more sense to buy covered calls at the price I'm willing to sell & keep the ...
Rick Maisto's user avatar
1 vote
2 answers
238 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 ...
Akrasia Lee's user avatar
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 ...
yossarian's user avatar
  • 421
1 vote
1 answer
132 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 ...
Maximillian Laumeister's user avatar
1 vote
1 answer
146 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 ...
user106530's user avatar
1 vote
1 answer
1k views

Accounting Entry for Selling a Covered Call

I recently started looking at trading options and started with the time honored tradition of selling a covered call. What I don't understand now is what my trading platform (TD Ameritrade) balances ...
Joe's user avatar
  • 171
1 vote
0 answers
186 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 ...
Mansi's user avatar
  • 31
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 ...
Ken - Enough about Monica's user avatar
0 votes
2 answers
330 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.
S7. 2021's user avatar
0 votes
2 answers
425 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 ...
ML33M's user avatar
  • 101
0 votes
1 answer
727 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 ...
Anonymous's user avatar