Sell a covered call

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. This strategy is generally used when you own the underlying shares and believe the stock's price will remain stable or slightly decrease 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 wish to sell. We'll automatically check for the availability of these shares before we process your 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:

  • Registered accounts
  • Non-registered margin accounts
Note: You must upgrade to USD accounts to write calls in an FHSA, TFSA, RRSP, or LIRA.

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 on the Wealthsimple mobile app and website.
  • 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 the Wealthsimple website.

Sell a covered call

Follow these steps to sell a covered call:

Wealthsimple app Web
  1. Log in to your Wealthsimple app
  2. In the search bar at the top of the page, type in the stock you want to trade options on
  3. Tap Trade, and select Trade Options to view available contracts
  4. Tap the date to select your desired expiry date
  5. Tap the contract you'd like to sell from the option chain
  6. Tap Sell
  7. Enter the number of contracts you want to sell
  8. Enter the lowest price you'd sell this contract for
  9. If applicable, choose your desired account and tap Review
  10. Review your order details and Place order
  1. Log in to your Wealthsimple account
  2. In the search bar at the top of the page, type in the name of the stock you want to trade options on
  3. Tap the stock from the list
  4. Tap the Options tab to view available contracts
  5. Tap the call option
  6. Select your desired expiry date
  7. Choose the contract you'd like to sell covered calls on from the option chain
  8. Select the contract you'd like to sell
  9. On the right side of the screen, tap on the Buy button to swap the order to a Sell
  10. Choose your desired sell type from the Order type menu
  11. Enter the required fields for the sell type
  12. In the Account field, select the account from which you want to sell the contracts
  13. Tap Review
  14. Review your sell details and tap Submit order

Options trading fees

Wealthsimple has a $0 per-contract fee on all successful buy and sell orders. Learn more about options trading fees and taxes.

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