Skip to main content
No. of Recommendations: 0
Hi ksubash -

When you’re executing a bull call spread, the long call covers the short call, so it should be treated at most brokers similarly to as if you were writing a simple covered call on shares you own.

Note that there is a chance that the short call gets assigned, which would leave you long the calls and short the shares. In that situation, if you don’t have sufficient margin permissions (such as if you’re trading in an IRA) or margin balance (such as if the stock skyrocketed against your short call), you would be required to close the short stock position, but you could either sell or exercise the long call position to come up with the cash to do so.

Regards,
-Chuck
Discovery/HR Home Fool
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.