1. How To Place A Covered Call Strategy With optionsXpress: Introduction
  2. How To Place A Covered Call Strategy With optionsXpress: What Is The Covered Call Strategy?
  3. How To Place A Covered Call Strategy With optionsXpress: Executing A Covered Call Strategy
  4. How To Place A Covered Call Strategy With optionsXpress: Conclusion

Start out by logging in to the optionsXpress platform and hover the cursor over "Trade" in the horizontal navigation bar. A drop down menu will appear, and from there click on "Covered Calls."

Figure 1: Click on "Covered Calls" in the trade menu after logging in.


The next step is to enter the ticker symbol for the stock purchase and the number of shares. In this case, we are buying 100 shares of Amazon stock – so we have entered "AMZN" in the "Stock Symbol" field, "Buy" in the "Action" field and "100" in the "Quantity" field.

Next, we add the symbol for the call option, again "AMZN." One call option contract is equivalent to 100 shares of stock, so in the "Quantity" field we enter "1."

Figure 2: Click on the "Option" button to bring up the detailed information on the option for the selected stock.


In the covered call example above, we are simultaneously buying 100 shares of AMZN and selling one call option. Click the "Option" link circled in red to bring up the detailed information on the option for the selected stock.

SEE: Exotic Options: A Getaway From Ordinary Trading

Figure 3: An example showing one August12 230 call.


Now we can see the strike price and the expiration date of the call option. Again, the strike price is the price at which the option contract can be exercised.

In this case we are selling one August12 230 Call. This means we are selling someone the right to buy 100 shares of AMZN at $230 in a timeframe of up until August 2012. This is a monthly option that expires on the third Friday of the month, in this case August.

From here you can also select the order type, a market order or a limit order. A market order is an order to buy or sell an asset immediately at the best available real time price. A limit order is an order to buy or sell an asset at a specified price or better. In the case of a covered call you would be using a limit/debit order.

SEE: Trade The Covered Call – Without The Stock

You also need to specify the order duration - day order or good 'til canceled. A day order is an order that expires automatically at the end of the day's trading session. A good 'til canceled order is an order that stays open until it is filled or canceled.

On the bottom right you can see the NBBO quote – this stands for National Best Bid and Offer. This is a useful reference, stemming from the SEC requirement that brokers guarantee their customers the best available ask price when they are buying securities, and the best available bid price when they are selling securities.

Once you have entered the information for the order, you are ready to click the preview order button at the bottom which will bring you to a page like this:

Figure 4: Previewing an order where you can see the details of your trade.


Here you can see all the details of your trade, including the estimated commission and order total. Once you have reviewed this information you are ready to place the covered call order.

SEE: An Alternative Covered Call Options Trading Strategy How To Place A Covered Call Strategy With optionsXpress: Conclusion

Related Articles
  1. Investing

    Top Brokers Offering Tools For Covered Calls

    Here are the brokers that offer the best tools for investors and traders to write covered calls and covered puts.
  2. Trading

    The Basics Of Covered Calls

    Learn how this simple options contract can work for you, even when your stock isn't.
  3. Trading

    Cut Down Option Risk With Covered Calls

    A good place to start with options is writing these contracts against shares you already own.
  4. Trading

    Trade The Covered Call - Without The Stock

    The standard covered call can be used to hedge positions or generate income. This calendar spread may do so more effectively.
  5. Retirement

    Write Covered Calls To Increase Your IRA Income

    Covered calls may require more attention than bonds or mutual funds, but the payoffs can be worth the trouble.
  6. Trading

    Going Long On Calls

    Learn how to buy calls and then sell or exercise them to earn a profit.
  7. Investing

    How To Earn Double-Digit Returns In A Matter Of Days

    It's one of the easiest and safest ways to generate 20%-plus returns on a regular basis. Once you've mastered the technique, I wouldn't be surprised if you stopped trading stocks or only buying ...
  8. Trading

    The Basics of Options Profitability

    The adage "know thyself"--and thy risk tolerance, thy underlying, and thy markets--applies to options trading if you want it to do it profitably.
  9. Trading

    Three Ways to Profit Using Call Options

    A brief overview of how to provide from using call options in your portfolio.
  10. Trading

    The Basics Of Trading A Stock

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
Trading Center