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I'm not sure I can ask specific portfolio questions. Anyway here goes...I've been long 200 shares of SWKS that are in the money by 25%. 6 months ago when SKWS was exhibiting some weakness, so I sold 1 Jan 2021 115 call. Now it looks like I may be called away I decided to buy another 100 shares below the 115 strike price. My though was that if I got called away I could keep the lower priced shares and assign the higher priced shares....Any thoughts?
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I still think it's a question for a tax lawyer. An alternative would have been to buy back the call...

Denny Schlesinger
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My though was that if I got called away I could keep the lower priced shares and assign the higher priced shares....Any thoughts?

But now you're 100 shares more exposed to SWKS. The best case is the price stays above 115 and you lose those shares in January. But you're accepting a lot of downside and no upside, as well as tying up more than $10,000 until January.

Bear
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My though was that if I got called away I could keep the lower priced shares and assign the higher priced shares....Any thoughts?

Google is your friend.

"... OCC randomly selects a member brokerage firm carrying a short position in that series for assignment. The brokerage firm may then assign the notice randomly or on a first-in, first-out basis. Regardless of what method the brokerage firm applies equity option writers are subject to the risk that some or all of their short options may be assigned each day."

"When options are exercised, the OCC decides to which brokerage firm the exercise will be assigned, and the brokerage in turn decides which customer will get the assignment.
...
Assignment is completely random, and an exercise can be assigned to and apportioned among several different call writers. ... The covered call writer doesn’t have to do anything; the call writer’s broker handles settlement, delivers the shares and collects the exercise funds."

So it sounds like the broker can deliver any of the shares you own, their option not yours.
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Your loss or gain is whatever it is. There is no such thing as "repair a bad position". Accept whatever gain or loss your position currently is. A classic mistake for relative beginners is to throw more money into a bad position in the hopes that it will turn around. Don't do that.

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But if you _really_ want to have control over which shares are associated with the short call you need to keep the other shares (that you don't want to be associated with the option) in a different account.

I think your position(s) look like this:
When your stock was 96 (on 11/21/19) you sold the 115 call.
Now it's 115 and you are thinking that it will be 130 at expiration.

You are regretting that you sold all the gain above 115, and wish you hadn't, and are scrambling for a way to reverse what you did.

Too bad. You sold all the upside beyond 115. Period. The End.

You want to keep a position in the stock. Your only choice is to buy more shares, since the ones that you sold (via the short call) are effectively gone. For you, those are dead shares walking, hanging around in your account like a ghost. But in limbo, since the price _might_ collapse and they won't get called away.

But, as Bear said, if you buy more shares now in anticipation of the original ones being called, you are more at risk because if the price collapses then both sets of shares will be losers.

The original question was focused on the wrong thing. You completely ignored the additional risk you are exposed to in buying more shares. That is what is most important, not which shares will get called away if they do in fact get called.

My advice: Close out this covered call position. Buy back the calls. Realize the fact that it is a loss. You bet that the price would not go up. You lost that bet.

You wanted to keep the stock. Then why in the world did you sell a call?????



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I don't know what you got for the call 6 months ago. But I look at the current Jan'21 calls and make a SWAG assessment.
You sold a call about $20 OTM. At 115 now, this would be equivalent to the 135.
The OTM Jan'21 135 call is bid 8.40.
The at-the-money Jan'21 135 call is ask 16.40.

Therefore, a loss of $8.00.
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I called Fidelity prior to posting this question. Fidelity stated that I should contact them as soon as I am called; then I can assign the lots to be used.
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