If I want to sell calls in order to utilize a covered call. How would I place the order. I can't confirm that my understanding is correct.
I believe that I would sell to open GMEAK (JAN 55C). Is that correct?
Thanks for the clarification. I'm going to watch the stock this week and determine which way to go. If the stock drops a bit. I'll probably buy the stock and wait to sell the calls. If is hangs out around $58, I'll probably buy the stock and sell the call the same day because I think that there is some downside potential in the short term. It's had a nice runup as of late.
"it doesn't (IMO) really matter if you do both of the transaction now or (say) tomorrow since the price of the stock and that of the option will move (up or down) together."
--> This is clarification for matt. lionel isn't saying (I don't think) that it doesn't matter if you do both transactions now or later in respect to selling the call today & buying the stock tomorrow. He's talking about doing "both" of them today "or" tomorrow. It wouldn't be big deal if you bought the stock then sold the option at a later date because you can always sell the option later (if the sock goes down you just won't get as much premium but if it goes up you'll do better).
However, you DON'T want to sell the calls first because you could get caught in a stock that gaps up and be forced to buy the stock higher iot sell it lower (at the strike) unless your doing so on a stock you expect to go down (don't try this anyway yet because it's risky-you probably don't have the options approval level anyway). GL
yes I called mine too. they said that unless I buy the shares at the exact same time that I sell the call they will treat treat it like a naked call. which makes no sense to me. I'm switching brokers. Zecco is a pain. The free trades are nice but it's too much of a pain in the ass. I'll keep my IRa in there since I cant trade options on that account anyway but I think I'll refund by scottrade account for awhile. anyone else have problems with Zecco?
Thats why I use ML. They are more expensive on commissions BUT provide service and don't charge extra fees for everything else.
In this case I would have sold the options first and waited on the stock until 3:45ish.
Of course there is no guarentee that that would always work either.