Combined Transactions - Buy/Write etc
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Combined Transactions - Buy/Write etc Mark As I continue to learn about options. I keep coming across this idea of doing combined transactions. An example is to buy a stock and sell a covered call simultaneously (as opposed to buying a stock and the next day selling the covered call option). Am I understanding this correctly? If it is possible to do this, do I need a special full service arrangement with my broker? I am currently using a discount online broker. Will I save on fees if I do a combined transaction? I would appreciate your thoughts on the mechanics of this. Rgds TR Hello TR, 1) Yes you understand correctly and it's possible to make two transactions simultaneously. Why have you been waiting until the next day? 2) I always write covered calls this way and recommend that others do the same. 3) This transaction is referred to as a 'Buy-Write.' You buy stock and write the call at the same time. 4) Any broker can do this type of trade for you. 5) I know of no broker that gives a discount in commissions for a buy-write. 6) I cannot tell you how to enter the order because each broker has its own trading software. But, in general, you show the desired trade as
8) Combination orders (called SPREADS) are a good idea and you don't have to do a buy-write. You can trade one option against another. Mark -- Mark D. Wolfinger The Rookie's Guide to Options: The Beginner's Handbook of Trading Equity Options |
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