Trading covered calls on IG

[Guest DavidL]

Hi there, 

I've just been reading up on covered calls, and did a search on IG here to see if it was possible to do it here.

I couldn't find what I was looking for, is it called something different, or do they simply not have this facility?

- sorry for the newb question!

David

[trade247]

options only available on the 'classic' trading platform I believe which I don't think new clients have access to. So unfortunately not at the moment - but with ESMA allowing ya to place options trades with unrestricted leverage it looks like IG may be putting more effort into their options offering.

 

[Guest DavidL]

Okay, thanks for letting me know. I'll have to find a site that allows covered calls, as it seems a less risky way to generate a cashflow.

[Caseynotes]

Hi @DavidL, I thought covered calls was an options strategy rather than a product, ... and just seen your link and it is. So what you are looking at is a strategy whereby you buy and hold a stock and sell options on it, you can do that on IG but I would respectfully suggest it is not really a strategy for someone starting out in options.

Also see;

https://www.thebalance.com/short-covered-call-1031344 

[Guest options]

I have just opened an account and you cant get options on it.

[Caseynotes]

Hi @DavidL, what type of account is that and what platform are you using?

[Guest DavidL]

Hi Caseynotes, are you responding to 'Guest Options' or to me? 

Anyway  thanks for your link. I've found that a very similar strategy is 'buy-right'.

This strategy seems like a good way to get a steady income since you get the premium no matter what the underlying share price does. Your only risk of loss is if the share tanks completely, and if you stick to blue chips, this seems unlikely.

Or am I missing something?

[Caseynotes]

Hi @DavidL, Ha, yes I did think the other poster was your self. I think your are broadly correct that the main risk is a drop in the stock and I was also going to suggest looking into the 'buy - write' schemes, but also be aware that these multi-legged transactions grow increasingly complicated and therefore so does the risk. I assume such schemes are delivered by specialist brokers though I am not too familiar with the details. If you are new to options I suspect the best way to learn is to start demoing basic single leg options first.

https://www.ally.com/do-it-right/investing/tips-for-writing-successful-covered-calls-part-4/

[Guest carm]

On 29/08/2018 at 23:46, Caseynotes said:

Hi @DavidL, I thought covered calls was an options strategy rather than a product, ... and just seen your link and it is. So what you are looking at is a strategy whereby you buy and hold a stock and sell options on it, you can do that on IG but I would respectfully suggest it is not really a strategy for someone starting out in options.

Also see;

https://www.thebalance.com/short-covered-call-1031344 

Hi DavidL - you mention 'but I would respectfully suggest it is not really a strategy for someone starting out in options.' - so what is strategy you suggest for someone starting out in options?

[Guest carm]

Can someone clarify if on IG I can only sell/buy Share options on the phone, not on the online platform?

I reached to IG help on the chat and asked how I can sell 'covered call options' on the IG platform. The answer I received was:
"Share equity are not available on online platform'. Only option to trade shares option is to call. "If you hold then on non leveraged account call us. If you want to trade on CFD, create a live CFD account first and then call us"

The first question from the person on the chat was 'Can you please let me know what do you mean by covered call option'.

I provided this link https://www.ig.com/uk/glossary-trading-terms/covered-call-definition

After some back and forth about opening a CFD account, I clarified that "I am looking to sell/buy options on shares that I already hold. How can I execute a covered call on the online platform?

 

Also, under my demo CFD account I can only trade options on the following asset class :
Indices
FX
Commodities

- So not on Shares.

 

When I asked why options on shares were not available on the online platform, this is the answer I received:
'Because there's plenty of shares available to trade and we cannot list each and everything on platform as well for option. Hence it is business decision to offer it on call only'.

 

[Caseynotes]

1 hour ago, carm said:

Can someone clarify if on IG I can only sell/buy Share options on the phone, not on the online platform?

I reached to IG help on the chat and asked how I can sell 'covered call options' on the IG platform. The answer I received was:
"Share equity are not available on online platform'. Only option to trade shares option is to call. "If you hold then on non leveraged account call us. If you want to trade on CFD, create a live CFD account first and then call us"

The first question from the person on the chat was 'Can you please let me know what do you mean by covered call option'.

I provided this link https://www.ig.com/uk/glossary-trading-terms/covered-call-definition

After some back and forth about opening a CFD account, I clarified that "I am looking to sell/buy options on shares that I already hold. How can I execute a covered call on the online platform?

 

Also, under my demo CFD account I can only trade options on the following asset class :
Indices
FX
Commodities

- So not on Shares.

 

When I asked why options on shares were not available on the online platform, this is the answer I received:
'Because there's plenty of shares available to trade and we cannot list each and everything on platform as well for option. Hence it is business decision to offer it on call only'.

 

yes that is correct, the platform does not offer share options, only options on cfd's for fx, indices and commods.

to buy/sell options on shares you are holding can only be arranged by the dealing desk by phone.

 

[dmedin]

3 hours ago, carm said:

'Because there's plenty of shares available to trade and we cannot list each and everything on platform as well for option. Hence it is business decision to offer it on call only'.

IG's web platform is shaky and unreliable enough as it is ... if they added call/put options it would overload their flaky system entirely. 

'Championing our trading' - yep

 

[dmedin]

Apropos of which, IG's latest video on Youtube is called 'how to short a vanilla call option'.  (Even the title confuses me)

Why the sudden interest in options, if they can't be arsed letting us trade them?