• user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:085b12e661ef0923a4b4db76ee6d74e3' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h1>Generating Huge Income with Covered Calls</h1>', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '1:085b12e661ef0923a4b4db76ee6d74e3' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:c3522a2abc9a66587f27a76871dc99f8' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<b class=\"normalize\">Covered calls</b> remain one of the best ways for investors to draw an income against their long term stock holdings. There are several strategies you can implement to generate the most income possible while limiting your downside. <br /> <br /><h2>Maximizing Investment</h2><br />Unlike other trading and <a href=\"/stocks/investing-strategies\" title=\"investing strategies\">investing strategies</a> that require only a small investment for each trade, generating an income with <a title=\"covered calls\" href=\"/options/covered-call.html\">covered calls</a> requires that nearly all of your balance is invested at one time. Where non-market neutral portfolios are usually predisposed to market action and risk, a <b class=\"normalize\">covered call</b> portfolio, even when market long or market short, is neutralized by the covered call income. <br /> <br /><h2>Work Dividends, Too</h2><br />You\'ll find that the best covered call income portfolios are those built around high dividend <a title=\"stocks\" href=\"/stocks\">stocks</a> for two reasons. First, dividend stocks provide an extra yield that can be pocketed each year. Plus, dividend stocks have much lower betas, and they are not as volatile as the overall market. The popularity of dividend reinvestment plans helps keep dividend stocks up, even when the rest of the market is down. <br /><br />Your goal with a covered call portfolio should first be consistency in stock prices and then consistency in income. Stable stock prices, especially in <a title=\"dividends\" href=\"/fundamental-analysis/dividends.html\">dividend</a> stocks, opens the door to collect large streams of income from your stock holdings without unnecessary risk taking. <br /> <br /><h2>Write Every Month</h2><br />To get the most bang for your buck with a covered call portfolio without accepting more risk, you\'ll have to write covered calls each month against your stocks. While long dated <a title=\"stock options\" href=\"/options/stock-options-introduction.html\">stock options</a> may look more profitable, and they can be, they also set you up for more risk. It is, after all, much easier to see a few weeks into the future than several months, and writing covered calls each month will not only provide a consistent income stream, but also shave off excess risk of loss. <br /><br />Writing new calls every month does not mean waiting until the last few days of each contract. Instead, you should look to write new calls roughly one week before the new contract rolls over. Doing so allows you to have your calls on the market at the same time other investors are looking to roll over their positions. The premiums for covered calls are at their widest at this time. <br /><br /><h2>Important Tidbits</h2><br />Out of the money <b class=\"normalize\">stock options</b> will generate less income, but they\'re also far less likely to be called. If your goal is to sell your stock, however, you may consider writing in the money calls for the chance to lock in your sale at the current price and even profit should the contract expire out of the money. <br /> <br />Do not panic if at the end of a contract, the option is <a title=\"in the money options\" href=\"/options/options-moneyness.html\">in the money</a>. This is a common occurrence, and the income will, over time, replace any lost <a title=\"capital gains\" href=\"/fundamental-analysis/capital-gains.html\">capital gains</a> from your holdings. Also, never forget that an option can be rolled out for another month if you believe the appreciation is short lived. <br /><br />Covered calls are an excellent income strategy for those willing to invest the time to monitor their portfolios and roll over options each month.', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '1:c3522a2abc9a66587f27a76871dc99f8' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:2fda152348bc4ae73408bf0b82608e9a' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide to navigating through the markets.</p><p>Tim is in the Timers Digest Top 10 Rankings for his newsletter and is the Author of \"The Secret Science of Price and Volume”. Ord also contributes to the Stocks &amp; Commodities Magazine.</p>', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '1:2fda152348bc4ae73408bf0b82608e9a' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:4dd69529abed14a5c1c8f3ba7e22f8eb' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Tradingsim.com provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for every symbol on the Nasdaq, NYSE, and AMEX.</p><p>Use the fast forward and pause features to analyze your trading decisions with more precision.</p>', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '1:4dd69529abed14a5c1c8f3ba7e22f8eb' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:151e49b034b3ac8a98c1331980da8b69' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2>Related Videos</h2>', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '1:151e49b034b3ac8a98c1331980da8b69' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:e6ff5fe7efa34d641d697991ec512c61' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2>Related Articles</h2>', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '1:e6ff5fe7efa34d641d697991ec512c61' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '4:64dc950e564b7bb494892459d2858add' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<div class=\"left\">\n <p>copyright &copy; 2011 MYSMP.com. All rights reserved.</p>\n <a href=\"/\">Home</a> • <a href=\"/advertise\">Advertise</a> • <a href=\"/sitemap\">Sitemap</a> • <a href=\"/privacy-policy\">Privacy Policy</a>\n</div>\n\n<div class=\"right\">\n <p>Designed &amp; Developed by: bxCreative.com: <a target=\"_blank\" href=\"http://bxcreative.com\">Web design</a></p>\n</div>', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '4:64dc950e564b7bb494892459d2858add' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:ef414e50ef3bcd60831c79a8ccac7f37' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2 class=\"pane-title\"><a href=\"/investment-articles\">Investment Articles</a></h2><h2 class=\"pane-title\"><a href=\"/premium-services\">Premium Services</a></h2> <h2 class=\"pane-title\"><a href=\"/free-offers\">Free Offers</a></h2> <h2 class=\"pane-title\"><a href=\"/video\">Videos</a></h2>', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '1:ef414e50ef3bcd60831c79a8ccac7f37' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:7ab206dca588aa9858fab14b55f27503' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>16192 Coastal Highway<br />\nLewes, Delaware 19958</p>\n', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '1:7ab206dca588aa9858fab14b55f27503' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:fb9bc3d8197c3f70b5a896cc8bae29d6' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<a href=\"/\"><img src=\"/sites/all/themes/bx/images/logo.png\" /></a>', created = 1576331227, expire = 1576417627, headers = '', serialized = 0 WHERE cid = '1:fb9bc3d8197c3f70b5a896cc8bae29d6' in /var/www/html/mysmp/includes/cache.inc on line 109.

Generating Huge Income with Covered Calls

Covered calls remain one of the best ways for investors to draw an income against their long term stock holdings. There are several strategies you can implement to generate the most income possible while limiting your downside.

Maximizing Investment


Unlike other trading and investing strategies that require only a small investment for each trade, generating an income with covered calls requires that nearly all of your balance is invested at one time. Where non-market neutral portfolios are usually predisposed to market action and risk, a covered call portfolio, even when market long or market short, is neutralized by the covered call income.

Work Dividends, Too


You'll find that the best covered call income portfolios are those built around high dividend stocks for two reasons. First, dividend stocks provide an extra yield that can be pocketed each year. Plus, dividend stocks have much lower betas, and they are not as volatile as the overall market. The popularity of dividend reinvestment plans helps keep dividend stocks up, even when the rest of the market is down.

Your goal with a covered call portfolio should first be consistency in stock prices and then consistency in income. Stable stock prices, especially in dividend stocks, opens the door to collect large streams of income from your stock holdings without unnecessary risk taking.

Write Every Month


To get the most bang for your buck with a covered call portfolio without accepting more risk, you'll have to write covered calls each month against your stocks. While long dated stock options may look more profitable, and they can be, they also set you up for more risk. It is, after all, much easier to see a few weeks into the future than several months, and writing covered calls each month will not only provide a consistent income stream, but also shave off excess risk of loss.

Writing new calls every month does not mean waiting until the last few days of each contract. Instead, you should look to write new calls roughly one week before the new contract rolls over. Doing so allows you to have your calls on the market at the same time other investors are looking to roll over their positions. The premiums for covered calls are at their widest at this time.

Important Tidbits


Out of the money stock options will generate less income, but they're also far less likely to be called. If your goal is to sell your stock, however, you may consider writing in the money calls for the chance to lock in your sale at the current price and even profit should the contract expire out of the money.

Do not panic if at the end of a contract, the option is in the money. This is a common occurrence, and the income will, over time, replace any lost capital gains from your holdings. Also, never forget that an option can be rolled out for another month if you believe the appreciation is short lived.

Covered calls are an excellent income strategy for those willing to invest the time to monitor their portfolios and roll over options each month.
Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

Tradingsim.com
Day Trading Simulator

Tradingsim.com provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for...

Send this article to a friend.

Enter multiple addresses on separate lines or separate them with commas.