Buy-Write Strategy: Buying Stock and Selling Calls Simultaneously
What Is a Buy-Write?
A buy-write is the simultaneous purchase of 100 shares and sale of a covered call in a single order. Instead of buying stock first and then selling a call separately, you execute both legs at once.
Advantages of buy-write: • Single execution means you lock in the exact premium at your purchase price • No timing risk between buying shares and selling the call • Some brokers offer reduced commissions on buy-write orders • Immediate income on your new position
The buy-write is identical to a covered call in outcome — it's just the method of entry that differs. You own 100 shares and have sold one call.
How to Execute a Buy-Write
Most brokers have a specific buy-write or "covered call" order type:
1. Select the stock you want to buy 2. Choose the "Buy Write" or "Covered Call" order type 3. Select your call option (strike and expiration) 4. Set your net debit limit (stock price minus premium) 5. Submit the order
Example: Stock at $100, selling $105 call for $3. • Net debit: $100 - $3 = $97 per share ($9,700 total) • This means your effective cost basis is $97, not $100 • If the stock stays below $105, you keep shares + $3 premium • If assigned at $105, your profit is $8/share ($800 total)
Buy-Write vs Traditional Covered Call Entry
Buy-write is best when: • You're initiating a new position and want immediate income • You want to guarantee the premium level at your entry price • The stock is at a price you'd buy anyway
Traditional (buy stock, then sell call later) is best when: • You already own the stock • You want to wait for an IV spike to get better premiums • You want to observe the stock's behavior before selling calls
Both approaches are valid. The buy-write is more efficient for new positions, while the traditional approach gives you more flexibility in timing the call sale. Covered Call Pro helps with both by showing real-time premiums for any stock you're considering.