Multi-asset investment specialist Saxo Bank has issued an update to its White Label (WL) partners.

If White Label end-clients wish to short sell stock-options—whether for a covered call, naked short, or as part of an option strategy – the WL must first enable them in Saxotools by applying the “Expert” profile.

Saxo is implementing changes to allow all clients to short stock options by default, provided they hold the underlying shares in their account (i.e., initiating a covered call). There is no longer a need to modify the CO Trading profile to open a covered call.

However, if WL clients wish to open naked short option positions or utilise option strategies, the CO Trading profile must still be set to “Expert”.

Clients attempting to close their share position while holding a covered call will receive the following error message, requiring them to close the short option leg first:

“Closing underlying position used in a covered call strategy is not allowed for high-risk rating security. Close the short call option(s) first.”

This measure prevents clients with covered calls from inadvertently ending up with a naked short option by closing the stock position alone.