In this article:
Overview
As a covered call seller, you have an obligation to sell a stock at a particular price on or before the expiry date. When you sell a covered call, you collect a premium for the options you sell. You'd generally use this strategy when you own the underlying shares and expect the stock's price to stay stable or dip slightly in the short term.
For the sale of a call option to be "covered" and eligible for trading on Wealthsimple, you must already own 100 shares of the underlying security for each contract you want to sell. We'll automatically check for the availability of these shares before we process your order.
Open your covered call in one order
If you don't own the shares yet, you can buy 100 shares and sell the call against them in a single order, at one net price. This is also called a buy-write. Learn how in Understanding combo orders. Combo orders are only available for US options.
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 sell a covered call option (a "sell to open" order), you can choose from different order types:
- Limit order: This order type reflects the minimum amount you're willing to accept as your premium. Limit orders are available in the Wealthsimple app and 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 minimum acceptable price.
- Market order: This order type sells the option at the best available price. Market orders are only available on web.
Sell a covered call
Follow these steps to sell a covered call:
- Log in to the Wealthsimple app
- In the search bar at the bottom of the page, enter the name of the stock you want to trade options on
- Tap Trade, then tap Trade Options to view available contracts
- Tap the date to select your desired expiry date
- Tap the contract you'd like to sell from the option chain
- Tap Sell
- Enter the number of contracts you want to sell
- Enter the lowest price you'd sell this contract for
- If applicable, choose your desired account and tap Review
- Review your order details and tap Place order
- Log in to your Wealthsimple profile
- In the search bar at the top of the page, enter the name of the stock you want to trade options on
- Select the stock from the list
- Select the Options tab to view available contracts
- Select the call option
- Select your desired expiry date
- Select the contract you'd like to sell from the option chain
- On the right side of the screen, select Buy to switch the order to Sell
- Choose your desired sell type from the Order type menu
- Enter the required fields for the sell type
- In the Account field, select the account you want to sell the contracts from
- Select Review
- Review your order details and select Submit order
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
- Buy to close 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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