I have a leap contract on a stock, but if the stock tanks and goes well below my leap strike price, can I still sell covered calls?
The covered call strike would be below the leap strike price but far enough from the current spy price.
What are the risks? I shouldn’t get assigned unless the stock price is above my covered call strike at expiration, correct?
Posted by Wide-Angle-1207
2 Comments
If the shares are trading below leap strike you might be able to sell calls depending on the brokers margin allowance for your account. If the sold call expires ITM you are definitely getting assigned the shares short whether you have a long position or not.
You will be selling an uncovered call. Are you approved to do that?