Part 3: 22 Reasons to Write Covered Calls
Part 3: THE WORKHORSE Is this example unique? Not in the least. We have about 10 to 20 that we're looking at any given time. Obviously there are many more. I'll repeat. This works because we buy the stock at a set price. We then sell the option with all the "fluff" contained therein and pocket the cash. Here's a final thought: Most people write covered calls to use the cash to live on. But what if you didn't have to pull it out, at least not this month? Do you realize that your new $900 could have almost purchased another 100, and you could have sold an extra contract for $90? Now you own 1,100 shares and can't wait to double dip (look for more information in my books), and for this month to go away so you can make another $900 or so next month. The formula is simple: #1 Buy stock, as many shares as you like. Try to always buy in 100 share lots as the options are 100 shares for one contract. #2 Sell Option. Choose a strike price you like, and you would do well to subscribe to WIN’s TDT, or Thousand Dollar Thursday.