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If you place a limit order to buy and price gaps through your limit price, you will not get to buy additional shares. If you place a conditional order that becomes a market order if a certain price is reached then you'll buy shares but who knows what the price might be? For example, with TSLA at $700, you sell an $800 covered call and you place an order to ...


4

When you sell shares (no options involved): If you plan to use any method besides FIFO, including LIFO, you must specifically direct your broker as to which shares to sell so that your taxes end up the way you want. According to Internal Revenue Service Publication 550, the burden is on you to prove that you informed your broker of which shares you wanted ...


3

Actual options on futures do exist (described in SRiverNet's answer), but this doesn't seem to be what you're referring to. Rather, you're drawing an analogy between a short futures contract and a short call option. You are correct that the risk of a large loss from a short futures contract is offset by owning a corresponding quantity of the underlying. But ...


2

If you buy the call back before expiration, the $4,000 will be considered a short term loss regardless of the length of time that the option position was open (short sales are treated as short-term even if they were open for more than one year). It might have been a good idea to either cover the short call before it appreciated so much or to have rolled it ...


2

The $115 in premium is part of the sell price ($1265) and you have a $30 gain. From page 58 of IRS publication 550: If a call you write is exercised and you sell the underlying stock, increase your amount realized on the sale of the stock by the amount you received for the call when figuring your gain or loss. The gain or loss is long term or short term ...


2

Covered calls have an asymmetric risk/reward and your example depicts that. You bear all of the downside risk while having the potential for a limited profit. AFAIC, this strategy is appropriate for a stock that you're willing to hold but have a target sell price. If taking on a new position just for the sake of the premium, AFAIC, there are safer ways to ...


1

The price then fell to $2.65, so I thought my total p/l would be 0.05c lost per share (-$5) + premium I received for the call (+$10) making the total +$5. Is this math correct? Also would I be correct in stating my total possible p/l is $40 ($10 from option sell, and +$30 if the stock price is at or above $3)? Correct on both, if at expiration the stock is ...


1

thought my total p/l would be 0.05c lost per share (-$5) + premium I received for the call (+$10) making the total +$5. Is this math correct? I'm guessing that the call has not expired, but it is now worth less than $0.10 and more then zero, so you'd need to pay some premium to close out the short option leg. Your "gain" on the option would be ...


1

If I write a contract, do I immediately receive payment for it from my broker? Or do I have to wait for someone to buy it ? You haven't sold a call until someone buys it. You'll collect the premium when it is sold. Since you'll then be holding an obligation you won't see any immediate change to your P/L. And secondly, if the stock hits the strike price, do ...


1

If I write a contract, do I immediately receive payment for it from my broker? Or do I have to wait for someone to buy it ? Well you don't "write a contract" unless someone is willing to buy it, but I think you mean "place an order to write". You get the premium when you sell the option, not when you place the order. And secondly, if ...


1

If you don't already own the exact option (not the stock), then your order would be "sell to open". You are opening an option position. If you own that exact option (same type, strike, and expiry) and want to sell it, then you would "sell to close". You are closing a position that you currently own. Note that selling covered calls (calls ...


1

You only sell covers if "you're kind of OK with getting out at a profit" This is the exact opposite of your situation! Again, you've literally described "when you would never, ever" sell covered calls. So don't do that, and forget the idea. I suggest you do what Bob.B. says in his final paragraph. I don't, like, understand it but I'd ...


1

You have two separate issues and you are conflating them. You have a $15k personal loan and you are considering a TSLA covered call. One has nothing to do with the other. The real questions are: (1) Whether doing a covered call on TSLA is a good idea (2) Whether you have sufficient assets to support the margin loan. The answer to (1) is that you'll know ...


1

When you sell a covered call, the buyer gives you a premium for the right to purchase 100 shares of your stock at the strike price until the expiration date. The entire premium is yours to keep if you are assigned (the buyer exercises his call and you must sell) or the call expires worthless in May. If you purchase stock XYZ for $15.75 and sell a May 2021 $...


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Fidelity is rejecting your order because you are using the wrong type of order. A buy stop limit is used to buy if price hits a specific point. It specifies the highest price you're willing to pay. The stop is above the market price of the stock and the limit is the highest price that you're willing to pay. A sell stop limit is the opposite. It's an order ...


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If you sell a covered call, there are 3 possibilities: At a later time you buy the call back, closing your short call position. This could result in a capital gain or a capital loss. The call expires worthless. This would be a capital gain. You are assigned and you must sell your stock at the strike price. The first two scenarios result in a short term ...


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All of this is computerized and happens automatically. On the most basic level, it checks to see if you have option trading approval, if you have the appropriate level of approval for the option transaction that you are attempting to execute as well as sufficient margin available if any is required. On the back end, it's all automated. If you are assigned, ...


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Assuming the investor already has other short term capital gains then from a tax point of view he is better off buying back the calls and selling the stock out right. No, that is not correct. Per IRS Pub 550 circa page 58: If a call you write is exercised and you sell the underlying stock, increase your amount realized on the sale of the stock by the ...


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