Covered Calls

Covered Calls

The covered call is a conservative options strategy. In executing the trade – you buy the stock and write/sell the call option. This strategy is typically used when we have a short-term neutral view on the stock. We will hold the stock long and simultaneously sell the option to generate income. We are have a proprietary covered call filter that selects covered call opportunities that have a high probability to generate income and profits.
In the case of the example below with GE – you would buy the stock and sell the option for $1.55 (collecting the option premium)
Stock Symbol Company Name Buy the Stock Sell the Option
GE General Electric Buy the stock for $27.06 Sell the $30.00 call expiring on Friday, April 21, 2017 for $1.55
WFM Whole Foods Market Buy the stock for $25.80 Sell the $27.00 call expiring on Friday, March 31, 2017 for $0.51

 

Performance of the Covered Call Strategy