The Simplified Covered Call Process

Writing a covered call consists of the sale of an option call while simultaneously owning the underlying stock. We will be reiterating this statement throughout this tutorial because when you understand this sentence, you will understand the basics of covered call writing.

Here is the step by step covered call writing process:

1. Select the stock on which you want to write a covered call. WinningInvestments.com researches this for you and provides you with six different categories to choose from depending on your risk preference.

2. Buy the stock. You can use an online broker or a full service, traditional broker.

3. Sell the option contract. You must have permission from your broker to sell options, but approval is almost certainly guaranteed because covered calls are the safest form of options trading.

4. Wait until the strike date. Nothing else is required from you at this point. There are some advanced techniques you can implement at this time, but they will be discussed later.

   On the strike date you may or may not be called out. Generally, if the closing price of the stock on the strike date is higher than the strike price, you will be called out. If the stock price is lower than the strike price you will not be called out, and you will still own the stock.

   This is Chapter 6 of 10

1. Introduction
2. Definition
3. Understanding Options
4. Key Terms
5. The Basic Concept
6. The Simplified Covered Call Process
7. Benefits of Covered Call Writing
8. Risks of Covered Call Writing
9. Calculating A Return
10. Getting Started