05-13-2021, 11:07 PM
Let’s discuss covered calls.
<!-- SC_OFF --><div class="md"><p>If you are investing covered calls or are interested in them let’s discuss it on this forum. </p> <p>I have recently gotten into covered calls because I like the risk reward that they offer. </p> <p>Let’s break down what covered calls mean. </p> <p>A covered call is when you buy 100 shares of stock and then sell a call contract. </p> <p>Covered means that you own the 100 shares so you are not using leverage since you own all shares of the contract. </p> <p>Calls are options that allow a buyer to collect profits after the price hits the strike price. </p> <p>When you do covered calls you sell these options on the options market. </p> <p>When you sell an option you get paid for the option to buy the stock at your strike price. I like setting my strike a few dollars above the current price. </p> <p>When the deadline of the option passes this contract expires. If the stock price is below the strike price then you keep all your shares plus the cost of the option. If it expires above the strike price then you give that money back to the person who purchased your option. </p> <p>Even if you have to pay someone that purchased your option that is a good thing as it means that you have recieved maximum profit on your trade. </p> <p>Worst case scenario the stock price drops. In this scenario you would be better off than the guy that just held 100 shares because you are also holding 100 shares but unlike a normal stock buyer you were able to collect the premium from when you sold the option. </p> <p>I love covered calls</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Counter-Business"> /u/Counter-Business </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/nbocck/lets_discuss_covered_calls/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/nbocck/lets_discuss_covered_calls/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>If you are investing covered calls or are interested in them let’s discuss it on this forum. </p> <p>I have recently gotten into covered calls because I like the risk reward that they offer. </p> <p>Let’s break down what covered calls mean. </p> <p>A covered call is when you buy 100 shares of stock and then sell a call contract. </p> <p>Covered means that you own the 100 shares so you are not using leverage since you own all shares of the contract. </p> <p>Calls are options that allow a buyer to collect profits after the price hits the strike price. </p> <p>When you do covered calls you sell these options on the options market. </p> <p>When you sell an option you get paid for the option to buy the stock at your strike price. I like setting my strike a few dollars above the current price. </p> <p>When the deadline of the option passes this contract expires. If the stock price is below the strike price then you keep all your shares plus the cost of the option. If it expires above the strike price then you give that money back to the person who purchased your option. </p> <p>Even if you have to pay someone that purchased your option that is a good thing as it means that you have recieved maximum profit on your trade. </p> <p>Worst case scenario the stock price drops. In this scenario you would be better off than the guy that just held 100 shares because you are also holding 100 shares but unlike a normal stock buyer you were able to collect the premium from when you sold the option. </p> <p>I love covered calls</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Counter-Business"> /u/Counter-Business </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/nbocck/lets_discuss_covered_calls/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/nbocck/lets_discuss_covered_calls/">[comments]</a></span>Kind Regards R