Comments on: How Stock Options Work Series: Covered Call Writing

By: شات

شات — Fri, 15 Apr 2011 20:18:34 +0000

دردشة

By: Cash

Cash — Wed, 16 Mar 2011 19:43:41 +0000

Good summary. For another example see this link:

http://tinyurl.com/2ua9jjm

By: Mike

Mike — Sat, 23 Oct 2010 04:41:06 +0000

I like your example (AAPL). I've been writing calls on AAPL for so long that my adjusted cost basis is below zero. And as Tim says, now they have weeklys on AAPL so you have 52 expirations per year. Nice. Good covered call screener here: Born To Sell (as well as free covered call tutorial, newsletter, and blog).

By: Tim

Tim — Sat, 23 Oct 2010 02:01:14 +0000

Hi – With weekly options now being more widely available and on stocks like Apple, Amazon, Bidu, the potential returns are huge per week. And, it’s a lot easier to look out just one week rather than whole month to see what the best strikes will be.
Cheers

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By: Darwin

Darwin — Mon, 14 Sep 2009 02:25:25 +0000

Thanks for the compliment Kevin.
Mark – Thanks for the note – on #1, wording could have been a bit better – meant to convey that the $500 is yours to keep with no strings attached. However, if shares bust past the strike, the $500 could be offset by the outflow you’re going to need to buy back the option to close it out to not have your shares swept away. #2 – yes, was a bit oversimplified. Thanks for keeping me honest!

By: Kevin

Kevin — Sun, 13 Sep 2009 23:32:39 +0000

Good explanation of the strategy. Love it. .-= Kevin´s last blog ..A Fantastic Explanation of Capitalism and Greed =-.

By: Mark Wolfinger

Mark Wolfinger — Sat, 12 Sep 2009 15:00:40 +0000

Darwin,

Well done.

Two quibbles:

1) “as long as shares are below $60 upon expiration in January, you’d keep the $500 …”

The call seller keeps the $500 no matter what happens and no matter where the stock is trading.

2) “You get Paid to Wait Around and do Nothing”

Although that statement feels true, you are not ‘doing nothing.’ You are (i>accepting the risk that the stock will tumble. In your case it’s a stock you want to own anyway – but that’s not going to be true for all covered call writers.
.-= Mark Wolfinger´s last blog ..Too Many Option Posiitons? =-.