Covered Calls-Writing Covered Calls

sz z asked:


what are the risks associated with the covered call? is there any more risk here than just plain owning the stock? I understand the reward is limited, but is there any additional risk here?

How far in the future to go for the expiration date? 1 month? Wouldn’t a closer month be better because you can collect the options premium, then do it all over again in a short period of time?

In the money vs out of the money, can I do either? Which is better and why?

Please specifically answer those questions only, I don’t need a 20 page essay pasted from another website. These are the only answers I need.

Thank you so much in advance!

Cornelius Bacak

danmann81 asked:


Hi everyone!

I mistakenly wrote & sold a covered call instead of a put now I want to call them back.

When the call was sold it was for $1.59 but since market closed the final price has dropped down to 93¢.

When I buy back the calls, is it recommended to do a market or limit transaction. Since I sold higher than what is being asked for right now did I make a profit? Should I wait for Thursday to come around and then call back the options then or should I do it asap?

Judson Gammage

ThaneTheBrain asked:


I think Google might tread water for a while, and I’m thinking of taking some income by selling covered calls for the coming months.

Eun Arre

blue_prince_of_dallas asked:


I saw a new infomercial this weekend about writing covered calls or LEAPS to generate returns with low risk. This morning (after learning what a LEAP is) I was looking at options prices for possible strategies and I’m trying to understand the real risks involved with using LEAPS instead of holding the underlying stock (so this question is probably very simplistic).

This morning the prices on Calls for QQQ at $45 are approximately:

Jan 09 – $2.45
Jul 07 – $0.90

If I buy a Jan 09 LEAP at $2.45 can I keep writing a one-month call and receive about $0.90 each month until Jan 09? This assumes that if the Jan 09 LEAP gets exercised I will receive enough to buy another LEAP and repeat the cycle each month. What am I missing here? This generates about 40% return per month at little risk, so it can’t be correct or we would all be retired and living off this “sure thing”.

Thanks

Ginger Verry