Quote:
Originally Posted by MrMaxwell
Can you sell these covered calls on shares you bought using leverage?
I hope I am saying what I mean .. lol!!
I would think that you probably can't... but would be interesting as hell if one could do that, yeah?
|
If you're talking about just selling the call, which in this case would be considered 'Naked', as opposed to covered, you actually can, but you have to meet the "Risk Level 5" requirements to be allowed to do it at Trade King.
Minimum Annual Income: $50,000
Minimum Option Experience: 3 years
Minimum Account Equity: $100,000
Here's, a PDF that lists all the Risk Levels.
Trade King Option Levels
I'm only approved for Risk Level 4 tades, so I wouldn't be allowed to do it. There may be some brokerages that aren't as strict, but it would make me wonder what kind of other shit the bank was up to if they just allowed anyone to do that trade. Kind of like my same reaction to sponsors who offer a high PPS. lol
Anyway, here's a summary of how the trade would work.
http://www.optionsplaybook.com/optio...es/short-call/
So, using that same example from the earlier post where you'd net $210 selling calls at the $11 strike price, the safer play would be to just sell the $12 strikes for $80 each. See here.
Strike Price Change Bid Ask Volume Open Int
11.00 0.28 -0.03 0.27 0.28 16394 36520
12.00 0.08 -0.01 0.07 0.08 14671 144348
There are quite a few different types of trading strategies, all of which have their own unique set of variables. The most advanced trade that I've ever done is an Iron Condor.
http://www.optionsplaybook.com/optio...s/iron-condor/