covered call with IB

O

osho67

I am about to make a beginning selling covered calls for US stocks. I have been doing this in UK for a long time. In UK my broker will buy shares for me and hold it in a nominee a/c.

I have now opened an account with IB and I understand that they will not buy the shares for a nominee a/c.

What are various ways to achieve covered call positions with IB?And what happens if I am exercised? Uk this is easy as my shares are there to be delivered.

Please help. Thanks so much for all the replies
 
Quote from osho67:

I am about to make a beginning selling covered calls for US stocks. I have been doing this in UK for a long time. In UK my broker will buy shares for me and hold it in a nominee a/c.

I have now opened an account with IB and I understand that they will not buy the shares for a nominee a/c.

What are various ways to achieve covered call positions with IB?And what happens if I am exercised? Uk this is easy as my shares are there to be delivered.

Please help. Thanks so much for all the replies
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i dont understand what you are getting at but if you sell covered calls you just buy the stock through ib and sell a covered call through ib. if you get exercised the stock will be in your account and ib will deliver it so you dont have to do anything. ib will handle it all unless you dont want to sell the stock then you will have to buy the call back maybe at a higher price than you sold it for.
 
I asked IB about buying stock and keeping in their a/c. They have said they donot do that. May be I have to have a long position in the stock.This is on margin. In UK I pay the full price of the stock to the broker. May be I will have to ask them again
 
Quote from osho67:

I asked IB about buying stock and keeping in their a/c. They have said they donot do that. May be I have to have a long position in the stock.This is on margin. In UK I pay the full price of the stock to the broker. May be I will have to ask them again
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yes you have to have a long position in the stock. otherwise its not "covered".
 
The IB account is the equivalent of a nominee account. You don't get an annual statement or vote. You do get dividends. Just buy the stock in the IB account and sell the call. You have to do it yourself electronically.
 
Quote from just21:

The IB account is the equivalent of a nominee account. You don't get an annual statement or vote. You do get dividends. Just buy the stock in the IB account and sell the call. You have to do it yourself electronically.
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IB recently forwarded to me standard invitation to Western Digital's shareholders meeting and instructions on how to vote over Internet.
 
Do I have to do the covered call as a combination order. Or I just buy shares separately and sell a call. I donot know how to do the combination order and there is nothing on IB website. Please help
 
Quote from osho67:

Do I have to do the covered call as a combination order. Or I just buy shares separately and sell a call. I donot know how to do the combination order and there is nothing on IB website. Please help
More...

Yes, you can just buy the shares and then sell the call. Shares and call are handled separately. You can even later sell the shares and have an uncovered call then.

By the way, this seems to be the reason for their annoying covered call margin formula which punishes you when the stock price increases too much and forces you to liquidate your position :(
 
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