In this lesson we’ll discuss the TWS Write Options tool which may be used to sell calls against long stock positions and sell puts against your short stock positions. We’ll explore the TWS Rollover Options tool to roll over options that are about to expire to a similar option with a later expiration date.
Let’s explore the Options Write/Rollover tool for Trader WorkStation, which enables investors and
Advisors to trade options against underlying positions in stocks.
For investors, writing options against securities they already own may provide additional income for
For Advisors, the Write/Rollover tool enables them to efficiently manage multiple accounts at the same
time and tailor a yield-enhancing strategy using open positions on securities. Advisors can select
accounts or a Group of accounts upon opening the tool.
Note that commissions incurred will impact P&L.
Multiple leg strategies, including spreads, will incur multiple commission charges.
For long stock positions, profits accrue as the price of the stock increases, while losses build as the price
Writing or selling call options against an existing long stock position results in income while limiting the
potential gain from rising stock prices. Investors keep the proceeds from writing options. However,
should the underlying share price settle above the chosen strike price at expiration, the stock position
may be called away from the owner by the call buyer at a price that is less than the current market price.
Investors may also create a collar combination by adding a long put position to the short call position.
The investor would receive income from the sale of the call and potentially be forced to sell the stock at
a price below its market price should the market price settle above the strike price at expiration. If the
stock price falls, the investor would have the income from writing the call and the value of the put may
In Mosaic you can access the Options Write/Rollover tool from the blue New Window dropdown menu
and locate More Advanced Trading Tools. From the tree, locate Write Options.
If you determine to cover and protect long or short stock positions, you may do so by clicking the
button. Check the appropriate box – for long positions check the box if you wish to sell covered calls.
Next, determine the options to write by making a selection from the dropdown menu. You can choose
from the soonest to expire or the nearest monthly or nearest quarterly expiration.
Determine how far above the prevailing share price you wish to select for options to write. Options
further away from the current price of the shares typically have lower premiums. By default, the tool
will establish a short position of one contract for every 100 share position for each stock you own, but
you may choose to alter the inputs in this field.
Next you can review your options to write by clicking on the Load Options button above the main
window. Your selected portfolio is displayed in the main window listed in alpha order. The software will
provide a population of possible options to write.
You can tailor each position by clicking on the pencil icon to the right of the main window. This allows
you to review more choices in Option Trader. To select a strike and month, simply click on the
appropriate line to replace that selected by the tool. Click OK to close the Option Trader.
Changes will be reflected in the main window. If you don’t want to write options against certain stocks
in your portfolio, simply uncheck the box on the associated line.
Make a selection from the Order Type selector in the Create Orders panel. You can choose Market or
Limit orders. When selecting Limit orders, note you can set your Limit price to a specified number of
pennies above the prevailing bid price.
If you change any criteria, use the Refresh List button to repopulate the values in the Call Option
Orders can be individually transmitted or after reviewing them you can use the Transmit all button.
Note the series of tabs in this part of the tool allowing you to view your trade log, trades and portfolio.
Use the Cancel All button in the event you want to make further changes or stop what you’re doing.
The Cancel All button will request cancellations but market orders and marketable limit orders may not
be able to be cancelled as they generally are immediately executed.
For previously written call options, you can review forthcoming expirations on the Rollover options tab
and make appropriate selections. Use the tool in the same way to create orders to identify and roll
Disclosure: Interactive Brokers
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Supporting documentation for any claims and statistical information will be provided upon request.
Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations.
Disclosure: Options Trading
Options involve risk and are not suitable for all investors. For more information read the “Characteristics and Risks of Standardized Options” also known as the options disclosure document (ODD). To receive a copy of the ODD call 312-542-6901 or click here. Multiple leg strategies, including spreads, will incur multiple commission charges.