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A covered call is a basic options strategy that involves selling a call option (or “going short” as the pros call it) for every 100 shares of the underlying stock that you own. It’s a ...
Covered calls are bullish by nature, while covered puts are bearish. [1] [2] The payoff from selling a covered call is identical to selling a short naked put. [3] Both variants are a short implied volatility strategy. [4] Covered calls can be sold at various levels of moneyness. Out-of-the-money covered calls have a higher potential for profit ...
However, there are a number of safe call-selling strategies, such as the covered call, that could be utilized to help protect the seller. Call options vs. put options
5. Sell Covered Calls. Selling covered calls is a more conservative option strategy that carries lower risk and lower reward. When you sell a covered call, it means you sell a call against a stock ...
These strategies may provide downside protection as well. Writing out-of-the-money covered calls is a good example of such a strategy. The purchaser of the covered call is paying a premium for the option to purchase, at the strike price (rather than the market price), the assets you already own.
A covered call position is a neutral-to-bullish investment strategy and consists of purchasing a stock and selling a call option against the stock. Two useful return calculations for covered calls are the %If Unchanged Return and the %If Assigned Return. The %If Unchanged Return calculation determines the potential return assuming a covered ...