Compare and Contrast: Owning Stock vs. Owning Stock and Selling a Call

Video description: A covered call is an options strategy in which an investor simultaneously buys a stock and sells a call option on that stock. The call option gives the buyer the right, but not the obligation, to buy the stock at a specified price (the strike price) on or before a specified date (the expiration date). By selling the call option, the investor collects a premium, which is the price paid by the buyer for the option. The covered call strategy is a relatively low-risk strategy because the investor already owns the stock that is being sold under the call option. This means that the investor's maximum loss is limited to the amount of the premium received. However, the investor's potential gains are also limited. If the stock price rises above the strike price of the call option, the buyer will exercise the option and the investor will be obligated to sell the stock at the strike price. This means that the investor will miss out on any further gains in the stock price. The covered call strategy is often used by investors who are bullish on a stock but who are not expecting a significant price increase in the near term. The premium received from selling the call option can help to offset any losses if the stock price does decline. Additionally, if the stock price does rise, the investor will still receive the strike price for the stock, which may be higher than the current market price. Here is an example of how a covered call strategy might work: An investor buys 100 shares of XYZ stock at $50 per share. The investor sells a call option with a strike price of $55 and an expiration date of 3 months. The investor receives a premium of $1 per share for selling the call option. If the stock price is at or below $55 at the expiration of the call option, the option will expire worthless and the investor will keep the premium. If the stock price is above $55 at the expiration of the call option, the option will be exercised and the investor will sell the stock at $55 per share. The investor will keep the premium and will realize a profit of $5 per share ($55 - $50 - $1). The covered call strategy is a versatile strategy that can be used in a variety of market conditions. It is a good option for investors who are looking to generate income from their investments while also limiting their risk. #steveganz #SJGtrades #options #SPX #incometrading #RUT #butterflytrade #butterfly #ironcondor #condor #trading #optionstrading #stockoptions #indexoptions #SPXoptions #tradingstrategy #optionseducation #technicalanalysis #marketanalysis #riskmanagement #tradingpsychology #volatilitytrading #ironcondor #butterflyspread #calendarspread #creditspread #debitspread #optionsexpiration #optiongreeks #optionsincome #Johnlocke #dansheridan #Sheridanmentoring #optionstrat