Top Nav

Covered Calls

Individual investors need to take a serious look at covered calls. This is especially true for investors who feel options are a highly risky trading vehicle.

covered-callsSo, what is a covered call?

By definition…a covered call is a conservative options strategy whereby an investor holds a stock or ETF in an asset and sells call options on that same asset to generate increased income. Unlike buying options outright, covered calls are a conservative strategy. In fact, covered calls are the only options strategy that is allowed in retirement accounts.

All you need to initiate the strategy is 100 shares of stock and a liquid options market. By liquid, I mean options with significant volume . If you own at least 100 shares of stock, then you have the ability to “sell a call” against your stock (assuming it has options, which most do). Remember, 100 shares of stock equals one option contract.

So why sell covered calls?

If you wish to bring in residual income on a consistent basis or if your market forecast is neutral to moderately bullish selling covered calls is the appropriate options strategy.

The Best Way to Prepare for the Inevitable Market Slowdown

Realistically, do we think the market is going to repeat its performance from several years ago, when the S&P 500 rallied 32.4% in one calendar year?

The Ultimate Buy-and-Hold Strategy

Investors are at the mercy of the market gods when it comes to long-term investing, but that doesn’t mean that a buy-and-hold strategy should be avoided.

How to Generate Income Using Weekly Options

The increase in the popularity of weekly options has made for highly efficient products that offer tight bid/ask spreads.

A Must-Read for GE Shareholders

Of the 10 most popular stocks, the position most widely held among investors 65 and older is General Electric.

Adjusting a Trade: How to Roll a Cash-Secured Put

Rolling is the most common form of adjusting a position, and provides the ability to be proactive when a position is being tested.

More Recent Covered Call Articles

View All Covered Call Articles

Income and Prosperity Offer

Income & Prosperity is designed to help you seek out the safest income opportunities and discover an entire world of dividend investments. This free newsletter has a laser-like focus on one issue and one issue only: how can investors near or in retirement generate more income. Each day, you'll receive our best investment idea - skewed towards safe income - but also including lesser known opportunities to grow your wealth while keeping it out of harm's way.
You've successfully subscribed, click the link in your email to confirm your subscription.
There was an error, and you have not been subscribed, please try again.