Fidelity (354016) Your order will leave your account with an uncovered option

Someone asks:

I’m trying to sell a covered call by placing a sell to open limit order but then got this error:

Fidelity (354016) – Your order will leave your account with an uncovered option position in cash.

What does that mean? My account was approved for Level 3 options.

Fidelity Error 354016 Explained

Some culprits may have caused this error in your account.

There should be no pending order

Before you can sell a covered call against a long position, there should be no limit order or pending order for the underlying stock. That will prevent you from opening a covered call.

In your account, click on the Activity and Orders tab. Check to see if there is an open order there. If so, cancel the sell order and open the option contract again.

Select the correct account

Make sure you’re trading in the correct investment account. This is important, especially if you have more than one account with Fidelity. Sometimes the wrong account might have been chosen for the trade.

For example, you can’t sell a covered call in your Roth IRA when the shares are being held in your taxable brokerage account.

Ensure that you are placing the order in the corresponding account of your underlying security.

If that doesn’t help, contact Fidelity customer service for additional assistance.

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