WHAT IS A COVERED CALL? A covered call is a way to cash flow the stock market. The process combines two well know ways to make money, and by this combination, people are able to generate monthly income, sometimes several times month. In short, one buys the stock and then sell a call option giving someone the right to buy her stock at a set price, sometime in the future. The seller (or writer) of this option sells the option and takes in the income for doing so in one day. This income is spendable or can be taken out for other uses. The word covered means that you actually own the stock. A call option is the right to buy a stock. Most people buy these risky options and most people lose. Writing Covered Calls reverses this process. We are not buying options but selling them. Others take the risk, we take their cash. By selling we take in cash and an obligation to deliver the stock at this certain price, a price that we are happy with. It is a monthly income machine. We sometimes call it: RIG, or Repetitive Income Generator.
Posted on: Sun, 21 Dec 2014 00:15:24 +0000
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