Stock options writing

Stock investors in search of income often gravitate options high dividend paying stocks. OptionsStock Coca-Cola Co NYSE: PG and Altria Group NYSE: Or, better yet, how about turning your favorite growth stock into an income generator?

Such sweet-sounding objectives become achievable once you master the art of covered call writing. The second half entails getting paid for a promise. Specifically, a promise to sell your shares at a price of your choosing. Stock exchange for bringing on this obligation, you are compensated by receiving some cold, hard cash. And the best part of the strategy? You can re-up the promise to sell options stock every single month, varying the agreed-upon price at stock. So how exactly do you make this promise?

Simply by selling a call option against your stock. Specifically, sell one call option contract for every shares of stock you own. Aside from the obvious benefit of scoring some income each stock from the sale of these covered calls, you also acquire a bit of downside protection to buffer minor losses in the stock.

In trader jargon, the premium received from selling monthly covered calls lowers your cost options, which has the wonderful effect of improving your risk-adjusted returns over time. Most traders look to sell short-term call options, say one to two months, to exploit the higher rate of time stock that hounds options approaching expiration. When more bullish, you writing consider selling a covered stock a few strikes out-of-the-money. When neutral, you could sell an at-the-money options.

If you duplicated your stock. Article printed from InvestorPlace Media, http: Financial Writing Data powered by FinancialContent Services, Inc. Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes. Trading Advice Trade of the Day Trading Report Writing to Trade Options. Breaking news sponsored by googletag. More on InvestorPlace writing Worst Stocks for Q3 and Q4 5 Hot AI Stocks writing Buy 4 Explosive Gold Mine Writing to Watch 3 Marvelous Mid-Cap ETFs to Buy writing Long-Term Gains 3 Stocks to Buy for Millennial Investors Is Costco the Next Target for Amazon?

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Selling options for beginners: When to sell options // Selling put options explained, writing puts