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.  

 

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