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Top 5 Covered Call ETFs (2022)
Exchange-traded funds (ETFs) have become a popular way for investors to access countless strategies, including covered calls. From smart beta to actively managed funds, there are many different ways for investors to generate an income above and beyond dividends. However, there are also several drawbacks to consider before using ETFs. Let’s look at the top […]
How to Calculate Covered Call Outcomes
Covered calls are one of the most popular option strategies used by both short-term traders and long-term investors. In fact, The Snider Investment Method uses covered calls at its core to generate consistent cash flow. The strategy is more conservative than most option strategies and is relatively simple to execute—the key is understanding how to calculate covered […]
How to Choose the Right Covered Call Expirations
Covered calls are a popular strategy for generating income from a portfolio of stocks. While the strategy may seem straightforward, investors must decide between various strike prices and expiration dates that influence the risk of selling stock, as well as premium income and capital gains. In this article, we will take a look at how […]
How Dividends Impact Option Pricing
Dividend stocks are a popular way to generate income, but they also impact several other investment strategies. For example, dividends impact option pricing. Let's say that an investor that’s selling call options to generate an income should be aware of how option prices behave when a company announces and pays a dividend to avoid any […]
How Option Greeks Affect Covered Calls
The concept of a stock option is fairly straightforward: It provides the right or obligation to buy or sell a stock at a specified time and price. Of course, the price of an option is influenced by a wide range of factors, including the underlying stock price, time remaining, volatility and even interest rates. These […]
How to Roll a Covered Call
The stock market is inherently unpredictable and even low-risk strategies can be ruined by new information. For example, covered calls provide a convenient way to boost portfolio income, but there can be a high opportunity cost if the underlying stock moves sharply higher. Rolling covered calls is a common way to manage these risks over […]
How to Find the Right Stocks for Covered Calls
Covered calls are a great way to generate extra income in your portfolio. However, while the strategy is pretty straightforward, questions quickly arise when beginners start to implement it. The first question is usually, “how do you choose the right stocks for covered calls?” Of course, the answer ultimately depends on your goals and market […]
How to Get Approved for Option Trading
Options have become a popular way to speculate, hedge against risk, and even generate income. If you’re interested in trading options, you must apply for special permission from your brokerage. They will then assign an options level that they feel is appropriate based on your account, education, history, and other factors. Let’s look at the […]
The Impact of Dividends on Covered Calls
More than 80 percent of large-cap companies in the S&P 500 index pay dividends, along with about 70 percent of mid-cap companies and just over half of small-cap companies. Many retirees rely on dividend income to fund their retirement without selling stock. Since covered call strategies are a great way to enhance the income from […]
Weekly vs. Monthly Covered Calls
Covered calls are a great low-risk strategy to generate an income from an existing equity portfolio. By selling call options against an existing equity position, protect your downside some if the price of the stock declines. The strategy enables you to generate an income above and beyond equity dividends. The two most common questions that […]
How to Find Stocks with High Option Premiums
Stock options provide traders and investors with a lot of flexibility when leveraging returns or generating income. While there are many different strategies, success often boils down to a consistent, risk-managed approach. Option sellers must consider the balance between high volatility and stock ownership to create a portfolio that meets their income needs. Let’s look […]
When Should You Roll a Covered Call?
Covered call options are often pitched as a low-risk way to generate an income on a long-term stock position. While you boost income with a covered call, there can be a high opportunity cost if the underlying stock moves sharply higher and you’re forced to sell early. Deciding to roll a covered call is a common way […]
Can Option Trading Really Give You Safer Retirement Income?
Option trading may sound like a risky endeavor, but like most investments, it’s only as risky as you make it. After all, stock investing can be incredibly risky if you’re investing in penny stocks, but few financial advisors would argue against a diversified blue-chip stock portfolio. The key to building income for retirement is using […]
5 Mistakes to Avoid When Selling Covered Calls
Here is a harsh truth: Not all investors succeed at creating a profitable portfolio. Sometimes this is due to the unpredictability in the market or various other factors, but more often new investors fail because they lack a solid investment strategy. In short, they don’t know how to navigate the pitfalls of the market. One […]