Tips on Selling Covered Calls
Selling Covered Calls is an effective method that allows an investor to make money from their stock. When you sell a call you are giving another person the right to buy the stock from you at a certain price.
This does mean that you are risking getting called out early, but it does not mean that it is not worth the risk, I find it very profitable.
If you like this strategy here are a few stock tips that can help you increase your return.
1. Look at The Company
Checking out the financial situation of the company is always a good thing. And it is just as true with covered calls. If you make 5% off the call in a month, but the stock goes to $0 it isn’t going to be very profitable.
Many times the appreciation of a stock company can also be worth it so picking good quality companies can be a good idea.
2. Look For Dividends
Adding dividend paying stocks to the mix can also be very powerful. This allows you to make money from the covered calls while at the same time make money from the dividends. It simply allows you to get a lot more for your work.
3. Buy Multiple Stocks
If you have an account dedicated to selling covered calls then you would be better off to pick a few different stocks. That way if something big occurs and one of your stocks goes under there are going to be others, it will hurt, but not kill you.
4. Sell Out Of The Money
I like to sell out of the money covered calls on my stocks. That way the stock can appreciate a little without me being forced to sell it. If it does you would at least make some money off of the stock as well as the call.
