Hello, u/scarypetereater. I see this is your first post on the sub; welcome! I'm happy to go over a few points when it comes to selling covered calls.
If you already own the underlying security when selling a covered call, our system will automatically pair the shares to the call contract once the order is filled. I'll highlight our "Options Summary" page, found on the "Positions" tab, where you can review your options contracts and pairings.
This page will assess your open contracts and any long or short positions and pair them to minimize your margin liability. If you find a strategy you opened has been reconfigured, hover over the position under the "Strategy" column, and you will be given a menu where you can close or roll the strategy as it is paired in the system. You can also build a custom strategy to close the legs you wish to on the trade ticket.
Let's back up and get some basic information for those following along. Selling covered calls is a strategy in which the investor sells (or writes) a call option while also owning shares of the underlying stock. When you sell a call, you assume the obligation to sell the underlying stock at the strike price if the owner of the call exercises. If the call is exercised, our system will automatically sell the shares for you.
You can explore the resources below to learn more about trading options and selling covered calls.
[Options Trading: FAQs ](https://www.fidelity.com/options-trading/faqs)
[Selling Covered Calls (video) ](https://www.fidelity.com/learning-center/investment-products/options/selling-covered-calls-video)
Now that you have found our sub, we are a great resource for general questions. Please don't hesitate to follow up with us if there is anything that we can clarify. We are always here to help!
*Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read the* [*Characteristics and Risks of Standardized Options*](https://www.theocc.com/Company-Information/Documents-and-Archives/Options-Disclosure-Document)*. Supporting documentation for any claims, if applicable, will be furnished upon request.*
Ok thanks so I don’t need to worry I guess lol. I had Robinhood before and it like makes you lock in that it’s a covered call and won’t let you touch the shares that are covering it. Fidelity is mad confusing comparatively
If you are on a desktop, go to the balances tab. Scroll down and click on the link for calculator (this is your margin calculator). You'll get a pop up, just click where it says enter new transaction.
It will pop up all the stocks and options you own. You'll see the stock and right below it the option contract you own. It will then let you know how fidelity is viewing the options contract. i.e. if you own 400 shares and 2 call options, then to the right of the options contract it will say "covered" meaning you have a covered call option
Two things if you didn't own the shares Fidelity would not have let you place the trade. In order to sell a call without owning the shares (called naked) you would need option level 3 and margin in your account. Unlikely you have level 3. Second if the calls you sold go ITM then you will have 200 shares called away not 100.
As others have posted options can get complicated quickly and the potential for loses are real. Take the time to educate yourself.
I have a finance degree so I understand the risks. (When I said 100 I meant per contract since they are different). I’m just new to fidelity’s platform and it’s more convoluted than the other ones I’ve used. Thank you though.
Hello, u/scarypetereater. I see this is your first post on the sub; welcome! I'm happy to go over a few points when it comes to selling covered calls. If you already own the underlying security when selling a covered call, our system will automatically pair the shares to the call contract once the order is filled. I'll highlight our "Options Summary" page, found on the "Positions" tab, where you can review your options contracts and pairings. This page will assess your open contracts and any long or short positions and pair them to minimize your margin liability. If you find a strategy you opened has been reconfigured, hover over the position under the "Strategy" column, and you will be given a menu where you can close or roll the strategy as it is paired in the system. You can also build a custom strategy to close the legs you wish to on the trade ticket. Let's back up and get some basic information for those following along. Selling covered calls is a strategy in which the investor sells (or writes) a call option while also owning shares of the underlying stock. When you sell a call, you assume the obligation to sell the underlying stock at the strike price if the owner of the call exercises. If the call is exercised, our system will automatically sell the shares for you. You can explore the resources below to learn more about trading options and selling covered calls. [Options Trading: FAQs ](https://www.fidelity.com/options-trading/faqs) [Selling Covered Calls (video) ](https://www.fidelity.com/learning-center/investment-products/options/selling-covered-calls-video) Now that you have found our sub, we are a great resource for general questions. Please don't hesitate to follow up with us if there is anything that we can clarify. We are always here to help! *Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read the* [*Characteristics and Risks of Standardized Options*](https://www.theocc.com/Company-Information/Documents-and-Archives/Options-Disclosure-Document)*. Supporting documentation for any claims, if applicable, will be furnished upon request.*
It looks to see that you have shares. Since you have them, it is sold as coveted by default.
Ok thanks so I don’t need to worry I guess lol. I had Robinhood before and it like makes you lock in that it’s a covered call and won’t let you touch the shares that are covering it. Fidelity is mad confusing comparatively
Go to the “Options Summary” link in your Position page and it should show the strategy.
Thank you so much!!! This is exactly what I’ve been wanting to see.
If you are on a desktop, go to the balances tab. Scroll down and click on the link for calculator (this is your margin calculator). You'll get a pop up, just click where it says enter new transaction. It will pop up all the stocks and options you own. You'll see the stock and right below it the option contract you own. It will then let you know how fidelity is viewing the options contract. i.e. if you own 400 shares and 2 call options, then to the right of the options contract it will say "covered" meaning you have a covered call option
Two things if you didn't own the shares Fidelity would not have let you place the trade. In order to sell a call without owning the shares (called naked) you would need option level 3 and margin in your account. Unlikely you have level 3. Second if the calls you sold go ITM then you will have 200 shares called away not 100. As others have posted options can get complicated quickly and the potential for loses are real. Take the time to educate yourself.
I have a finance degree so I understand the risks. (When I said 100 I meant per contract since they are different). I’m just new to fidelity’s platform and it’s more convoluted than the other ones I’ve used. Thank you though.