Covered call writing is essentially selling 1 call option against each shares of that stock that you own. There are lots of books and websites that explain the ins and out of covered call writing but essentially its a neutral to bullish strategy because you are long the underlying stock and therefore want the stock to stay flat or move up.

Generate Safe Income With My Covered Call Options Strategy

Traditionally covered calls are done each month as the time decay is the fastest in the last 30 days, but with weeklies you can now sell calls against your position every single week If there are weekly options offered on your stock. Most people just write a slightly out of the money call option against their stock so that it leaves some room for stock appreciation while also getting the bonus of option premium but investors should realize that covered calls are a great way to play short term moves too.

Weekly Stock Options For Covered Call Writing: Pros And Cons | The Blue Collar Investor

There is risk with covered calls though in that the underlying stock could move down and then you are losing more on the long stock or long call then the premium you received from the sold call.

You can always roll the short call down because if the stock moves down then the short call will decrease in price.

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Another risk is with the strategy mentioned above with buying calls instead of stock you have to understand delta, theta decay, and volatility skew knowing the underlying volatility of the purchased call vs. As you can see implementing weekly options for covered calls instead of waiting a whole month to see quick time decay is a great benefit of weekly options and something that every call writer so pay attention to.

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Weekly Options for Covered Calls Brian KineticTrader Options Trading , Trader Lessons , Weekly Options No Comments. Related Posts Stock Market Sentiment Indicators No Comments. Add a Comment Cancel reply Your email address will not be published.