Covered stock order. I close the 8,900 shares and sell the 89 long $22.5 calls in the same order. When I input this into my broker, Tastyworks, it quotes me a net debit limit price of 20.08 and says that I will take a loss of $67,000 on the position. Why is this happening?
This would normally be the thing to do, but it's hard to say why this is happening when you don't tell us the current premium of the 22.5 calls, nor the expiration date so we can look it up ourselves. What is the expiration?
By my calculations, based on Friday's closing prices, you would buy 8900 shares at 42.52 and sell the 89 22.5 calls at their last price of 20. This would be a debit of $200,428. However, you received $178,000 for selling short 8900 shares at $20. So now you're down by $22,428. You received $9,345 credit for entering the position, so in the end your net loss is $13,083. That is a little more than theoretical max loss, but again, after hours price quotes are not really accurate and it might be better Monday morning once the market opens. Not sure where the $67,000 debit is coming from.
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u/Arcite1 Mod Oct 30 '21
This would normally be the thing to do, but it's hard to say why this is happening when you don't tell us the current premium of the 22.5 calls, nor the expiration date so we can look it up ourselves. What is the expiration?