Or you can:
Buy 100 AMC shares = -$6800
Sell 1 AMC $75 call = +$3000
Net cost for AMC = $38
(Take a look at all those calls, most strikes expiring > 2weeks from $60-80 are around $30, which is like 40-50% of security price! Price difference of each strike is smaller than the strike intervals!)
At expiry, if:
AMC < strike (calls expire worthless) = max gain $7500-6800+$3000 = $3700
AMC >strike (I get exercised) = Max gain capped $3700
AMC stay at $68 = gain $3000
AMC tanks = $6800-$3000= $3800 max loss (I lose net cost of shares)
Unfortunately, tiger brokers does not support covered calls. After chatting with Customer Support, I was told “system does not support covered calls”.
I was told that in the event of further price increase, I would be asked to deposit more and more funds, or else the will liquidate my holdings, including the AMC shares. If they liquidate those, my covered call will become a naked call.
My losses should have been capped to what I paid for the shares, less option premium received (about $38/share). Instead, it could become *unlimited*. This results in sabotaging the entire trade and destroying my relatively secured position.
Opinion: What’s the smart way to play AMC’s stock? Try these two options strategies
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