Active Investors: Wouldnt you just love some extra earnings from the stocks you have in your account? Well, its available; risk is involved but that is easily managed. There are people in the world who will pay a premium for the RIGHT to purchase a stock at a fixed price by a given date and if you happen to own some of that stock, YOU can earn that premium. Google search covered calls and read the related Investopedia articles on how this works. If you do this, keep the following in mind: 1) One (1) call option requires 100 shares of the underlying stock. 2) You have to be willing to let that stock go for the agreed upon strike price. 3) You CAN NOT dump the stock if there is an outstanding call on that stock. 4) If the stock jumps, you will NOT get anything beyond the agreed upon strike price. 5) Not all stocks have options. Check Yahoo Finance Option chain. 6) Commissions are high when writing covered calls, selling one option (for 100 shares) may not really worth it. 7) Your account may NOT have the right to write covered calls, check with your broker. Writing covered calls is simply a tool to enhance your market gains. That is all.
Posted on: Fri, 05 Sep 2014 12:57:25 +0000
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