Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile
If I write a covered call for a stock I
bought at 30.50, am I allowed to place
a stop-loss price, say, 27.00, to protect
it from further decline? What happens
if the stop-loss price is triggered?
Although one of the components of
a covered call is the underlying stock,
it is still a spread, since it contains a
combination of both a long and a short
position. Most brokers do not place
stop orders on spreads. However, you
can probably place what is known as a
contingency order, in which the spread
is sold based on the stock price alone.