Your profit on the transaction includes the premium that you received for writing the options, plus the difference between the strike price of the option and your purchase price of the stock. Therefore, in addition to still owning the underlying shares of stock, you pocket the premium that you received for selling the call options. If the stock price has fallen since purchase, your loss has been cushioned by the income from the option. Writing covered calls can even cushion losses during a bear market. This is important because stocks must be bought in blocks of 100 shares in order to write a call contract.
Call option has sufficient volume and open interest.
Call option to expire in less than 2 months. Stock has positive daily price momentum. To help you decide what type of investing is most suitable for you, consult your personal investment advisor. For additional background, you may also want to browse through the online Bookstore . Take the time now to complete the free trial subscription form.