Covered Call Option Strategy -

Covered Call Option Strategy

The day by day growing popularity of binary options trading platform is due to the innovations in its strategies and tools designed by expert investors. There is a huge range of options strategies available in the modern age to enable all types of option traders to trade productively. People are looking for understanding of effective strategies, this article has a mindset to equip you with one of the most popular and profitable trading strategies named as covered call option strategy.

With the help of a covered Call strategy you have a way to generate additional income from a stock you have owned.
Rather than just hanging around for Company extra payments and the stock price to go up to realize an earning you can also deem writing calls against the stock you are happy to own.

Why To Use The Covered Call Option Strategy ?

In the continent of Australia, people trade Options per Contract which is in general 1000 shares. Therefore you will require being in charge of that number of stocks or its multiples for you in order to apply this strategy. A trader would also only apply the strategy if it shaped part of your Trading Plan as well as it meet the standards for which you to Trade.

Basically this strategy means that you make the sale of a Call against your owned Stock for which you will take delivery of a premium. This delivered premium is income you would not have earned if you only stayed with the Buy and Hold and remained waiting for the price rises or dividends. The risk in this tactic is that you may have to put up your Stock for sale at a predestined price and you could fail to spot some potential benefit. For example if you own a $26.00 stock and sell a $27.00 Option against it, the stock may have to be sold for that price. You still avail the premium you made from selling the Option; you also get the price for which you sold the options.

You can all the time purchase the Stock back again right away if you are worked out to guarantee you get any benefit. You can also go to roll the Option. Where you can buy back the Sold Option and rewrite it for the subsequent month at a huge strike price. If that Stock does not hit the strike price of your Sold Option then you can continue to keep the premium you were rewarded and you can also keep the stock you own along with being free to write another Option against it in the subsequent month for more profits.

Important Tips Regarding This Strategy

Depending on your owned stock you would consider a 3-5 % return to be realizable per month with the help of this strategy. Always bear in your mind that there will be Brokerage charges to be allowed when doing any type of Trading. These bills should always be documented as evidence of transactions you do make to give you an accurate % made / Lost per trade.

The records are also made for the reason as if you have to proclaim anything as the profit they may stand as evidence. Always search for Professional guidance if you have any uncertainties or are unsure of how to proceed.

Covered call option strategy, hence, enables online traders to add to their extra income and gradually become an expert trader. The strategy is an effective and profitable tool to earn as much as possible through binary options trading. But, if you really want to comprehend and take full advantage of the policy, you must keep in mind the facts mentioned above in the article.

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