Writing Covered Call in Online Options Trading

Covered call is a combination of stocks and options.

The steps of writing covered call in online options trading :

1. buy a stock
2. sell a call option

The characteristic of writing covered call in online options trading:

• return : limited
• risk : unlimited

Calculation of writing covered call in online options trading

1. return = ( strike price of option sold - the purchased price of the stock ) + premium received
2. loss = unlimited until the stock price falls to zero
3. break even = the purchased price of the stock - premium of the call options

When to use covered call in online options trading?

when you own a stock and believe that the stock 's price will remain relatively unchanged for the short term but is bullish in the long run.

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