Everyone has opinions. They give you their two-cents worth. I'll give you more. One penny more. That's a cool 50% more than others. And that's wicked value. The LIVEROCKET investment philosophy is that at any given time, there are amazing companies out there that are building better mousetraps and generating incredible sales. This is not a buy and hold philosophy. No company can maintain exceptional growth and momentum for long.
posted by Andrew at
12:14 PM
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4 Comments:
Good luck, Andrew. I am not such an expert to write covered call. Is there any book you suggest to read?
Writing covered calls considered a conservative strategy (not sure Andrew will agree?)
writing covered calls works when the stock is moving sideways and not all that volatile.
But the best part is ..when you write an option you receive the premium instantly.
So this strategy complements Straddles.
What Andrew doing here is that selling stock option of ETFC @ $4 strike price at a premium of .40. Now if the price of the stock goes below $4 then the person who bought this option from Andrew will not exercise the option and it will expire and Andrew will earn the premium.
However suppose the stocks keep on climbing and reached $6 ..now the person who bought the option from Andrew will exercise the option but Andrew already bought the ETFC 2000 @ $3.75 and sell it to the person. In this case Andrew is covered. But selling Naked or Uncovered options, is extremely risky.
Thanks takestock for explanation. However I understand the general concept of covered calls. Until the options expire or exercised, do you need to keep the underlying stock? If the person who buys the option exercises, do you sell your security to him for $4?
Until the option expires, you are required to have the stock available. You could buy it back if you want if someone decides to exercise the call.
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