Covered calls and brokerage

Sad to say that, ICICIDirect customer care was not able to help me in explaining how to do covered calls. I found that information here :thumb:

Searched previous posts and found is, I have to buy 100 shares (incase the lot size is 100) and then sell (write) option. This involves considerable brokerage, right?? Is there any broker who will do it together? Or if buying shares and then writing the call is the only way, could you kindly share from your experience, which broker is good in terms of brokerage?

Thanks for any help

I don't think any of the brokers in India do this. Not sure about other countries. Also the lot size of the contracts here is not 100 but varies for each stock.

So to write a covered call you need to have enough money to buy the stock and enough margin for (=futures) writing the call. It will be expensive. Some brokers give margin on the stocks held that can take care of the margin for writing the call.

Cheers,
Thimma

Thanks thimma... so it looks like naked call, but covered by buying and selling . Should take into consideration the T+2 days for the stocks to get credited etc...

Yes. If you want to write covered calls.

OK SO YOU KNOW COVERED CALL STRATEGY... GOOD

ANYWAY YOU ARE LEARNING OPTIONS TRADING ... ONE QUE TO YOU
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QUE
WHICH IS PROFITABLE??? 1)COVERED CALL OR 2)SELLING NAKED PUT
:thumb:

Naked put if profitable in trading. If you want to save tax on the underlying stocks then covered calls are good. It depends what is your motive. If only trading and profit then naked put, but if you want to save tax also then covered call is better. any suggestions and corrections

Covered call is a strategy to avoid the losses. The profit is limited as with selling any other options. Naked put will be better considering net profit. If things go the other way, then covered call helps.

Again it depends on many other situations, like when we buy the shares and write the call.

Please comment.

Could you explain what is the tax that is saved with covered calls?

If you hold the underlying stock for short term or long term