IB Option Trader for Covered Calls

From: http://theoptionguru.com/blog
A demonstration of one way that the Interactive Broker's Option Trader panel can be used to create a buy-write (covered call) order.

For more information on Covered Calls and useful tools, visit my blog at http://buywrite.wordpress.com

Thanks - Jeff

Category:

Howto & Style

Tags:

• covered calls
• interactive brokers
• buy-write
• IB
• buy-write order

[bbmak1125]

you buy 100 shares and sell a call contract

when buyer exercise the contract, you will deliver the shares in your account to them instead of doing a naked call that you need to go to the market and buy the shares?

[jwilly333]

@bbmak1125

Sorry this took so long. Yes, you are correct. You 'naked' call is covered by the stock so you don't have to buy the stock at whatever market price it happens to be at.

◄Jeff►

[craigelliottmusic]

In your video it showed that you bought the stock for 39.03 when your limit was 36.25. I'm confused here. Is the Bid Ask you were pointing to in the beginning of the video the price of the stock? If so why did it sell you the stock for 3 dollars more than you limit.

Thank you for your help

[jwilly333]

I bought the stock for a debit 39.03 and sold the Call for a credit of 2.78, so the net total cost (debit) for the trade is 36.25 (39.03 - 2.78 = 36.25). I hope this helps.

- Jeff

[jwilly333]

There are a few advantages to Covered Calls: 1) You collect a dividend if applicable 2) Call premiums are generally slightly higher than Puts 3) Naked Puts requires a higher trading level and may not be allowed by some brokers in an IRA.

[wellerdr]

Very good video - short and sweet, Thanks

[jwilly333]

Thanks - more to come.

[cmonster85]

Brilliant! Thanks for sharing. It really helps.

[wellerdr]

I have been using IB for years and did not know you could do a BUYWRITE. Going to try it right away. It helps to get another perspective on things and maybe even try something new.

Thanks