How to write call options at IB?

Discussion in 'Order Execution' started by arilou, Aug 17, 2009.

  1. arilou


    Can anyone please help me how I can write a call option at Interactive Brokers TWS?

    I asked the support, but they told me just to simply click on the bid price of the option and short sell it, but I think it is short selling an existing option, not writing a new one.

    I tried it on a demo account, and no premium appeared on my balance as I expected, but only a simple unrealized P/L value.

    Does anyone have experience with this?
    Thank you in advance.
  2. Dude: not to be rude, but the depth of your cluelessness is stunning. Go pick up a basic options book and read it before annoying the sh*t out of everyone here with questions like this.

    FYI: Selling short a call option is the same thing as 'writing' a call option.
  3. just21


    New seller meets new buyer equals increase in open interest. Don't hit the bid as the market on most options is very wide. Turn on the model price in configuration and make a better price than the offer a few ticks above the model price. If you want to trade quickly enter a price equal to the model price.
  4. u21c3f6


    I would hate to see what you would write if you WERE being rude! :eek:

  5. Rimping


    When you sell an option, what does it matter to you wether you increase open interest or not?
    So I really don't understand your question.
  6. Hit the bid. Period.
  7. Rimping


    Maybe this helps:
    When you sell an option as an opening position and your counterparty does a close buy on his short position, his short position becomes your short position. With open interest nothing changes in this case.

    But when you sell an option as an opening position and your counterparty goes long that option as an opening position then a new contract has been created. Open interest increases.
  8. +1
    In any case, make sure you understand the risks involved.
  9. arilou


    Thanks for all the answers! Even to you, Sell'em :)

    I think my problem is of somewhat technical nature. What I do not really understand is how the transaction is reflected in my balance and why. I thought that if I sell a call option at a price, then it should be reflected in my cash balance as a fixed and non changing increase. After all I sold something (an obligation to sell stocks at a price), for which I should have received some money to my account that does not change (the premium).

    But what I see on IB's Account page after I sold the call option, is a new item in my securities portfolio that is changing its value depending on current option price, generating ever changing unrealized P/L for me. As if I sold short stocks.

    When I sell short stocks, I understand that sometimes in the future I will have to buy it back, so there MUST be an unrealized profit or loss that depends on the current price.

    But when I have sold an option, I am not forced to buy it back in the future, so why does my P/L depends on the current price of the option? What I am oblidge to do is to sell the stocks, if required. But that will be a different transaction, and should be a different item on my balances sheet (at least I think so).

    I admit that I am a beginner in the option business, and maybe I really do not understand something fundamental, but everyone was a beginner. And it is IB's Account page that confuses me, so I dont think I can learn it from general books on options. And unfortunatelly, IB's customer support is not too helpful. So where else could I turn to? :)
  10. just21


    I have two IB accounts. In my new account the premium in a different base currency has not shown up. I am waiting for expiration when I expect this to show up. In my old account, with the same base currency as the option sold the premium shows up. I think it is because you have a new account.
    #10     Aug 17, 2009