Covered Call Options Strategy (Guide + Examples)

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Covered call writing is a very common strategy among income investors. A covered call consists of selling a call option against 100 shares of stock. The premium from selling the call provides downside protection on the long stock position and creates a stream of income on the shares without any added risk.

In this video, you’ll learn:

1. What are the characteristics of the covered call strategy?
2. What does the expiration risk graph look like for a covered call?
3. How do covered calls perform when the stock prices moves up, down, or sideways?

Also, you’ll see three real covered call trade examples to demonstrate how the strategy performs relative to changes in the stock price.

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Comments

dmtetreault says:

Why is there a short call noted above in the video? I thought doing a covered all involved just selling one covered call? My confusion stems from taking multiple courses from multiple teachers who call the same things differently.

dmtetreault says:

I'm totally confused. If I understand this method correct, you are buying a short call. Why? I understand just buying calls. You do not on the underlying stock. You purchase a call at a strike price and hope that the underlying stock appreciation value. Why would you sell a call on the short basis.? I've heard of call option strategies that use the word 'naked' to describe their short position.

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