Stop for covered call

Discussion in 'Options' started by yabz, Dec 10, 2002.

  1. yabz

    yabz

    What is the best way to put a stop on a covered call assuming that you are not monitoring the trade in real time?

    If you place an order to sell the stock if it falls below a certain level then you would be left with a naked call. Alternatively putting a stop order on the call might result in buying the call back while still holding the stock.
     
  2. Since a covered call position has the same payoff structure as selling a put, you may want to enter a stop to buy a put. This should offset your loss in the covered call position.