For anyone who is looking to get safe monthly income covered calls are the best financial instrument to use. The great thing about these types of calls is that they allow you to have a safe income while still maintaining the stock. Bellow is a basic summary of how to go about choosing a stock and how to go about receiving money from this stock.
The first thing to understand is what exactly a covered call is. What it essential does is allow someone to buy a stock at a particular price. This means that a person who buys the call option is going to be able to purchase a stock at a particular pre-set price.
What you need to do is determine what type of stock is right for you to use. Many people suggest using a strategy that buys a highly traded stock. This is because the more volume the more option activity. This is a great thing to look for when you are going to be buying a security.
The next thing is to be safe and secure in your pick. You do not want to own some company where there is little security in owning it. This is why exchange traded funds that deal in gold are so popular. People love gold and it is always highly traded. So what a person could do is buy a gold fund or a gold mining stock and then sell options on it. They would make income on their investment even if the stock was never called away.
The next thing is to pick a stock that has a decent amount of volume. The most popular stocks for options trading are those that have decent amounts of trading. This is why it is popular to select a security that has daily trading volume that is high compared to the rest of the market.
When you are looking to sell options you want two things. A decent premium and decent volume. Some people buy a lot of shares of a stock so they can sell for a small premium. The other way is to buy fewer shares of a company and then sell closer to the buy price. This will sometimes result in the stock being sold however if you plan your numbers right you
You will also want a stock that has some form of value. It is important to remember that this is a stock that you are going to be keeping in your portfolio. This security is not something that you are going to hold for a short time and then sell. Therefore it is important that you pick something that is not going to drastically fall in value.
When you engage in covered call selling you stand to make steady income. What you need to do is make sure that you have selected a security that you are comfortable owing and will not want to sell. This is the reasons that many people choose safe stocks or investments in companies that are holding gold. These funds and stocks have value and are highly traded.
The first thing to understand is what exactly a covered call is. What it essential does is allow someone to buy a stock at a particular price. This means that a person who buys the call option is going to be able to purchase a stock at a particular pre-set price.
What you need to do is determine what type of stock is right for you to use. Many people suggest using a strategy that buys a highly traded stock. This is because the more volume the more option activity. This is a great thing to look for when you are going to be buying a security.
The next thing is to be safe and secure in your pick. You do not want to own some company where there is little security in owning it. This is why exchange traded funds that deal in gold are so popular. People love gold and it is always highly traded. So what a person could do is buy a gold fund or a gold mining stock and then sell options on it. They would make income on their investment even if the stock was never called away.
The next thing is to pick a stock that has a decent amount of volume. The most popular stocks for options trading are those that have decent amounts of trading. This is why it is popular to select a security that has daily trading volume that is high compared to the rest of the market.
When you are looking to sell options you want two things. A decent premium and decent volume. Some people buy a lot of shares of a stock so they can sell for a small premium. The other way is to buy fewer shares of a company and then sell closer to the buy price. This will sometimes result in the stock being sold however if you plan your numbers right you
You will also want a stock that has some form of value. It is important to remember that this is a stock that you are going to be keeping in your portfolio. This security is not something that you are going to hold for a short time and then sell. Therefore it is important that you pick something that is not going to drastically fall in value.
When you engage in covered call selling you stand to make steady income. What you need to do is make sure that you have selected a security that you are comfortable owing and will not want to sell. This is the reasons that many people choose safe stocks or investments in companies that are holding gold. These funds and stocks have value and are highly traded.
About the Author:
Born To Sell, borntosell com, is a website about covered call trading. If you are interested in covered call investing you can get more information on Born To Sell's site.
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