Quantum Technalysis Security Positionning
An investor who buys or owns common stock (or an ETF) and writes call options in the equivalent amount can earn
premium income without taking on additional risk. The premium can serve as a virtual dividend that the investor
receives on her asset. Many conservative investors use this strategy as a means of earning additional income
on the stocks/ETFs in their portfolios. Alternatively, the premium can be viewed as a way to reduce the stock's
cost basis. Importantly, if the stock price rallies above the call's strike price, the stock is increasingly likely to be
called away. Since the possibility of assignment is central to this strategy, it makes more sense for investors to
view assignment as a positive outcome.
Motivation - The primary motive of writing covered calls is to earn premium income, which has the effect of boosting
overall returns on the stock and providing a measure of downside protection.
Writing Covered Calls