In this article:
Overview
When you've sold a covered call, you can end the position early by placing a "buy to close" order. This means purchasing the same options contract you originally sold, which cancels your obligation and frees up your shares that were previously tied to the position. You can also close the option and your shares together in one order.
Eligible accounts and stocks
We support covered calls on all securities that are eligible for options trading on Wealthsimple. You can trade covered calls in the following account types:
Canadian options
- Registered accounts
- Non-registered accounts
US options
- Registered accounts
- Margin accounts
Understand order types
When you place an order to buy back an open covered call option (a "buy to close" order), you can choose from different order types:
- Limit order: This order type reflects the maximum amount you're willing to pay for the option's premium. Limit orders are available in the Wealthsimple app and on web.
- Market order: This order type purchases the option at the best available price. Market orders are only available on web.
- Stop-limit order: This order type lets you set a stop price that activates your order and a limit price that sets your maximum acceptable price. This order type is only available on web.
Buy to close a covered call
Follow these steps to buy to close a covered call option:
- Log in to the Wealthsimple app
- From the Home tab, tap the Holdings banner
- Tap the Options tab
- Tap the option you want to buy to close
- Tap Buy at the bottom of your screen
- Choose your desired buy type from the Order type menu
- Enter the required fields for the buy type
- Choose your desired account and tap Review
- Review your order details and tap Place order
- Log in to your Wealthsimple profile
- From the Home page, scroll down to Holdings
- Select the contract you'd like to buy to close
- On the right side of the screen, select the Buy tab
- Choose your desired buy type from the Order type menu
- Enter the required fields for the buy type
- Choose your desired account and select Review
- Review your order details and select Place order
Close your whole position in one order
You can close your whole covered call position, both the option and the shares, in a single order at one net price. Combo orders are available for US options only. Learn how in Understanding combo orders.
Options trading fees
We have a $0 per-contract fee on most successful buy and sell equity options orders for US options. For Canadian options, there's no Wealthsimple commission, but an exchange fee of $0.04 CAD per contract applies on both buys and sells. . You can find our detailed fee schedule on our website.
Related articles
- Enable options trading in your investing account
- Understand options terminology
- Options trading fees and taxes
- Trade Canadian options
- Buy a long option
- Sell a long option
- Sell a covered call
- Manage and close options positions
- Understanding combo orders
- Use auto-sell for options
- Understand exercising options and assignment
- Trade options in a margin account
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