Performing a Buy/Write Transaction
Why is it difficult to perform a Buy/Write today? Does your system not handle this type of trade? Or do you have to “fudge” it using your existing system?

Can you submit an order with the options and underlyer tied together so they execute simultaneously? Will the weightings re-adjust as the market moves?

The ModelRoute Solution
With ModelRoute you can easily perform a Buy/Write by buying a specific number of shares of an underlyer security. To provide a hedge against downside price movement and/or to augment current income, you can sell the appropriate number of Call options against the long underlyer position.

To establish the properly weighted position, ModelRoute offers an Order Type, Contract Variable/Underlyer Constant, and allows you to purchase a specific number of shares. You can also enter the Expiry Date and the Strike Price for the Call option, and its Implied Volatility.

ModelRoute then automatically generates the Fair Market Value for the Call – the option’s Dynamic Limit Price (DLP) – the Delta and other related “Greeks,” and calculates the appropriate number of contracts to be sold.

As the market price for the underlyer fluctuates, ModelRoute automatically re-models the Call’s DLP and adjusts the number of contracts that need to be sold in order to preserve the desired hedge ratio.