Covered Calls Tips
Selling Covered Calls can be a very effective strategy to produce extra money off of a stock that you already own. When you sell a call you give another person the right to buy the stock from you at a certain price.
This means that you can potentially be called out of the stock, however the premium you receive can definitely be worth the risk, especially considering you can sell them over and over again.
If you want to learn more about profiting with this strategy here are some 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 important when you are selling 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.
Also the appreciation of the stock can also be a very profitable advanture so looking for strong companies that will likely grow in the future is just a wise thing to do.
2. Look For Dividends
Adding dividend paying stocks to the mix can also be very powerful. This way you can make a monthly income by selling covered calls while at the same time make money off of 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. This way if something happens to one company you always have others lying around.
4. Sell Out Of The Money
I like selling out of the money calls on 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.
Tags: Covered Calls Tips, tips on selling covered calls
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