TradeStops also helps you track options.

Option cost basis alerts are intended for two types of option trades – naked puts and covered calls. These alert types allow you to be alerted when the price of the underlying equity falls above or below your overall cost basis in the option trade.

For naked put positions, the cost basis of your position is the strike price of the put minus the premium per share that you were paid for selling the put. This alert type is only active for Short Put positions.

These alert types can be added on existing options by clicking on the symbol of your option from your Positions & Alerts page to open the position details screen. Next, click “Add Alert.”

In the available alerts window, select the Option Cost Basis tab (1).

Naked Put

The Naked Put cost basis alerts allow you set a percentage value below or above this cost basis at which to be alerted (2).

naked put cost basis alert
TIP: If you sold a put with a $50 strike price and you received $1 for selling the put, then your cost basis is $49. If you set a 25% below cost basis alert, we will alert you when the underlying stock falls to $36.75 (25% below the cost basis of $49). You can set this percentage tighter if you wish. 

For covered call positions, the cost basis is the amount that you paid for the underlying stock minus the premium that you received for selling the call. This alert type is only active for Short Call positions.

Covered Call

The Covered Call cost basis alerts allow you set a percentage value below or above this cost basis at which to be alerted (1). You also need to enter the amount you paid for the underlying stock (2) in order for the program to calculate your cost basis.

covered call cost basis alert
TIP: If you purchased a stock for $50/share and you received $1 for selling a covered call on it, then your cost basis is $49. If you set a 25% below cost basis alert, we will alert you when the underlying stock falls to $36.75 (25% below the cost basis). You can set this percentage tighter if you wish. The idea is that you don’t want the underlying stock to fall too low below your cost basis, as you may want to sell your shares of the underlying stock and buy-to-close your call option.

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