How can I tell if my position is covered or not?

For a sale to be considered covered, the following conditions must be met:

• The option type must match (a Call is covered by a Call, a Put is covered by a Put);
• The expiration date must be the same;
• The underlying asset must be identical (for example, Apple does not cover Nvidia);
• The quantity must match (1 contract = 100 shares).

If these conditions are not met, the system will not allow the trade for a non-qualified investor.

Matching the option type

If you sell a Call, you must have a position that protects you from a price increase — for example, owning the underlying shares or having a purchased Call on the same asset.

If you sell a Put, you must have a position that protects you from a price decrease — for example, having enough cash to buy the shares or a purchased Put on the same asset.

In other words, a Call cannot be covered by a Put and vice versa, since they are contracts with opposite directions.

Matching the expiration date

Coverage is only valid if both the sold and the covering option share the same expiration date.

If the dates differ, a “time gap” may occur — a period when one option has already expired while the other remains active, leaving you unprotected.

Example: You sell an Apple Call with expiration on October 18, but your covering Call expires on October 11 — after the 11th, you’re no longer protected, and the sale becomes uncovered.

Examples of covered sales

1. Covered Call sale:

You own 100 AAPL shares and sell 1 AAPL Call — the position is covered.

2. Covered Call sale with another option:

You bought 1 Call 120C (15 Sep) and sold 1 Call 115C (15 Sep) — this is covered because both options are of the same type and have the same expiration date.

3. Covered Put sale:

You hold a short position of 100 AAPL shares and sell 1 Put 115P (1 Nov) — the position is covered.

Examples of uncovered sales

1. You own only 1 share, but you sell 1 Call — not enough shares to cover (1 option = 100 shares).
2. You bought a Call and sold a Put — different option types.
3. You bought a Call expiring in August but sold a Call expiring in September — different dates, uncovered position.
4. You bought a Call on AAPL and sold a Call on NVDA — different underlying assets, uncovered position.