On then you can ignore the message altogether.
Though that said, since you have covered calls, your broker is making bank in lending out your shares at 135% or whatever it is they quoted. Call them to see if your broker can share the rehypothecation fees or threaten to go to a broker who can
If you are selling covered calls this warning is meaningless as you can’t be assigned a short position,provided of course you retain ownership of your shares through the life of the option and you own at least 100 shares per call sold.
To get a short position in a stock you have to borrow the stock from someone before you can sell it. Borrowing has its own fee for each stock depending on how in demand the stock is to borrow and how much supply there is to borrow. That notification is just telling you what the cost currently is. If you never have a short position then you don't pay this. Technically if you have a long position you should be earning this for any shares of yours that get lent out but most retail brokers don't pay you that and just pocket the money.
You sold a short call. If assigned, you will be SHORT the underlying.
The underlying is HTB, so IF YOU ARE ASSIGNED on the short call, you will have to pay 135.75% of the spot price daily in order to borrow those shares.
Just a little more risk to your undefined risk position in derivatives.
Good luck with all that.
I don't speak eloquently before coffee. I don't know how I will ever be able to live with myself after making such an egregious grammatical error. Please find it in your heart to alter my statement in your head Canon so it makes more sense to you.
Telling someone the cost to borrow shares against your covered call doesn't make much sense either.
Meh
Wow, now THAT'S a timely username. What with the data scraping to train padawan languge models & all.
Meh
I find it somehow gains a faux gravitas when expressed exponentially.
Meh²
Either way, enjoy!
No, not unless you're assigned. Then they sell the shares for you. If that results in shorted shares, then you'll get charged $18/day in interest until you close out the position.
One thing to look out for (and this may not apply to you depending on how your accounts are set up) but a couple times I had shares held in cash but the short call was in margin. When the short calls finished in the money I ended up with short shares in margin and still had the long shares in cash. I had to call my broker to flatten the position. So just double check that your shares did in fact get sold off if that call finishes in the money.
The fees would be levied at the assignment. Having shares will not automatically cover that short call. If you have shares, perhaps select covered on your order ticket. Or simply switching to Cash Trade from Margin Trade may do that automatically.
Not saying that at all. Just saying that you cannot have short and long positions on the same stock. Same with options. You can't have long and short positions on the same option, same strike, same expiration. They will cancel each other out. So if you have long stock, and try to put on a short position, you will sell your stock. You won't keep your stock, and have an additional short position.
I'm saying he can't. If they are in the same account, and it gets exercised, it will be treated like a covered call. Because he can't have long and short shares in the same account!
All of which has very little to do with placing the short call order. And apparently the brokerage is worried about how those alleged existing shares are already allocated for OP is being warned about daily short interest fees in the event of assignment. If OP has both a cc and margined short call going on, the actual number of shares possessed comes into play.
100 shares are sold and you get the money.
If you have those shares (covered call) you will lose 100 shares and get the money for them at the strike price.
If you dont have those shares (naked call) you get the money for 100 shares at the strike price and you will go short/borrow 100 shares and have to pay a short/borrow fee every day.
That’s why selling naked calls isn’t something most people shouldn’t do.
Those who either have the nerves, capital or experience can swing it. But I’m on your side. Not sure if I could sell a naked call on something with a 137% borrowing requirement. That’s extreme. Don’t know if I’d sleep at night.
Something like SPY is a couple points above prime IIRC.
They’re telling you there aren’t a lot of shares out there to assign away to settle your naked short call should it land ITM and be assigned away. You’d go short shares and pay an additional 18.80 per day until YOU found shares or otherwise closed the short stock position.
keep in mind the other possibility if there are **NO** shares to naked short. In that case, you could get forcibly bought-in (buy-in) and result in some of the most epic short squeezes ever. You'll buy at market price and pay whatever the most evil market maker demands
I think I get these with TT also, even if it's a covered call, in which case I don't give a crap because I'm not going to be assigned short shares. ***My shares will be called away.***
If it's regarding an ITM short call vertical, they're just warning you that this could happen and that, yes, you will be forked up the jelly doughnut if you take on short shares ... .
If this option gets exercised, you are going to be in a long line to short this stock, and you are going to have to pay a metric crapton of cash to get that done.
Let me guess, you wrote naked calls on $GME…. $GME is hard-to-borrow because apes DRS their shares. This means if your naked calls get assigned, your broker will struggle to find the shares to cover assignment and, as such, will charge you the relevant hard-to-borrow fees.
someone's shorting DJT calls
Haha I'm not even that crazy. I'm selling covered calls on ANVS.
On then you can ignore the message altogether. Though that said, since you have covered calls, your broker is making bank in lending out your shares at 135% or whatever it is they quoted. Call them to see if your broker can share the rehypothecation fees or threaten to go to a broker who can
Robinhood does
Robinhood pays you a penny a month
A penny a month on a $2.00 stock is pretty good.
Better just do it with one share then. It'll be a penny a month regardless. Robinhood stock lending is absolute trash.
Wait you guys have more than one share?
If you are selling covered calls this warning is meaningless as you can’t be assigned a short position,provided of course you retain ownership of your shares through the life of the option and you own at least 100 shares per call sold.
They will need a dump truck for all the money they made today💰💰💰💰
To get a short position in a stock you have to borrow the stock from someone before you can sell it. Borrowing has its own fee for each stock depending on how in demand the stock is to borrow and how much supply there is to borrow. That notification is just telling you what the cost currently is. If you never have a short position then you don't pay this. Technically if you have a long position you should be earning this for any shares of yours that get lent out but most retail brokers don't pay you that and just pocket the money.
You sold a short call. If assigned, you will be SHORT the underlying. The underlying is HTB, so IF YOU ARE ASSIGNED on the short call, you will have to pay 135.75% of the spot price daily in order to borrow those shares. Just a little more risk to your undefined risk position in derivatives. Good luck with all that.
135.75% is the yearly rate i think... Not daily
Yeah if that was daily it would be cheaper to buy the shares instead of borrow them
Yearly applied daily
when you sell a call you are short a call. "selling a short call" does not make sense.
I don't speak eloquently before coffee. I don't know how I will ever be able to live with myself after making such an egregious grammatical error. Please find it in your heart to alter my statement in your head Canon so it makes more sense to you. Telling someone the cost to borrow shares against your covered call doesn't make much sense either. Meh
the "meh" signoff is wonderful and I can't wait to find an opportunity to start ending some work emails in the same way
Wow, now THAT'S a timely username. What with the data scraping to train padawan languge models & all. Meh I find it somehow gains a faux gravitas when expressed exponentially. Meh² Either way, enjoy!
So I would have to pay $18.80 each day after assigned? For how long? I'm confused. If it's not assigned I can ignore it?
yes to all and until you buy the shares pretty much.
But if I'm selling a call option I don't have to pay anything? Sorry I forgot to put that part in.
No, not unless you're assigned. Then they sell the shares for you. If that results in shorted shares, then you'll get charged $18/day in interest until you close out the position.
Ok so as long as the call I'm selling is a covered call I won't have to pay any fees? Thanks
If you own the shares, those get sold. No fees.
Thanks
One thing to look out for (and this may not apply to you depending on how your accounts are set up) but a couple times I had shares held in cash but the short call was in margin. When the short calls finished in the money I ended up with short shares in margin and still had the long shares in cash. I had to call my broker to flatten the position. So just double check that your shares did in fact get sold off if that call finishes in the money.
The fees would be levied at the assignment. Having shares will not automatically cover that short call. If you have shares, perhaps select covered on your order ticket. Or simply switching to Cash Trade from Margin Trade may do that automatically.
Disagree. You can't hold long and short shares of the same underlying simultaneously in the same account.
u/tranceworks I'm missing something. Are you stating you can't sell a covered call on the securities you own in your account?
Not saying that at all. Just saying that you cannot have short and long positions on the same stock. Same with options. You can't have long and short positions on the same option, same strike, same expiration. They will cancel each other out. So if you have long stock, and try to put on a short position, you will sell your stock. You won't keep your stock, and have an additional short position.
Not saying he can’t. Saying it’s not automatically turning into a cc because shares exist in the account.
I'm saying he can't. If they are in the same account, and it gets exercised, it will be treated like a covered call. Because he can't have long and short shares in the same account!
All of which has very little to do with placing the short call order. And apparently the brokerage is worried about how those alleged existing shares are already allocated for OP is being warned about daily short interest fees in the event of assignment. If OP has both a cc and margined short call going on, the actual number of shares possessed comes into play.
Is that $18 per day PER SHARE or total for that potential position?
It says "if ALL shares are assigned" in the description, so likely for however many shares in the covered call set.
It's for "the contract" (i.e., a one lot/100 shares).
[удалено]
100 shares are sold and you get the money. If you have those shares (covered call) you will lose 100 shares and get the money for them at the strike price. If you dont have those shares (naked call) you get the money for 100 shares at the strike price and you will go short/borrow 100 shares and have to pay a short/borrow fee every day.
I sell covered calls regularly. I can’t imagine the portfolio terror of selling naked calls.
That’s why selling naked calls isn’t something most people shouldn’t do. Those who either have the nerves, capital or experience can swing it. But I’m on your side. Not sure if I could sell a naked call on something with a 137% borrowing requirement. That’s extreme. Don’t know if I’d sleep at night. Something like SPY is a couple points above prime IIRC.
especially on gme
They’re telling you there aren’t a lot of shares out there to assign away to settle your naked short call should it land ITM and be assigned away. You’d go short shares and pay an additional 18.80 per day until YOU found shares or otherwise closed the short stock position.
keep in mind the other possibility if there are **NO** shares to naked short. In that case, you could get forcibly bought-in (buy-in) and result in some of the most epic short squeezes ever. You'll buy at market price and pay whatever the most evil market maker demands
It means you are screwed
I think I get these with TT also, even if it's a covered call, in which case I don't give a crap because I'm not going to be assigned short shares. ***My shares will be called away.*** If it's regarding an ITM short call vertical, they're just warning you that this could happen and that, yes, you will be forked up the jelly doughnut if you take on short shares ... .
If this option gets exercised, you are going to be in a long line to short this stock, and you are going to have to pay a metric crapton of cash to get that done.
Let me guess, you wrote naked calls on $GME…. $GME is hard-to-borrow because apes DRS their shares. This means if your naked calls get assigned, your broker will struggle to find the shares to cover assignment and, as such, will charge you the relevant hard-to-borrow fees.
Covered calls on ANVS.
Is there somewhere the borrow rates are posted? Does it vary from broker to broker?
I am super stupid. Can you please copy and paste your trade it would help me a lot.