Generate Income with Covered Calls
COURSE
Generate Income with Covered Calls
Learn how to use short calls to generate additional income from stocks or ETFs you already have in your portfolio.
Looking for a little extra income in your portfolio? Dividends and bonds just not cutting it these days? Covered calls provide a great way to generate extra income off of your current stock holdings while also giving you a small cushion to the downside, should your stocks start to move lower. In this course, we’ll show you how to generate monthly income using covered call options.
In this course, you will learn:
- How covered calls generate income and protect against some losses in a long underlying stock or ETF position
- Which strike price and expiration date works best for your covered call strategy
- The costs (and opportunity costs) of covered call trades
Once you have completed this course you will:
- Know what you have to do to get approved to trade covered call options
- Understand how to execute a covered call, or “buy write,” trade in your account
More Information
| Difficulty Level: | Easy |
| Modules: | 4 |
| Lessons: | 16 |
Course Syllabus
Generate Income with Covered Calls
| Module 1 | Introduction to Covered Calls | |
|---|---|---|
| Now that you have a basic understanding of what options are and how they work, it’s time to look at how you can put options to work for you to generate income in your portfolio. So how do you generate income in your portfolio using options? The answer: you sell covered calls. | ||
| Lesson 1 | Reading: Introduction to Covered Calls | |
| Lesson 2 | Video: An Introduction to Covered Calls (5:15) | |
| Lesson 3 | Quiz: Covered Calls | |
| Lesson 4 | Assignment: Describe Front-Month Strike Price Characteristics | |
| Module 2 | Choosing a Strike Price | |
| The first thing you need to do when constructing a covered call is determine which strike price you would like to sell. Making this determination will affect how much income you can generate from the trade, what downside protection you will enjoy by entering the trade and where you will cap your potential profit on the trade. | ||
| Lesson 1 | Reading: Choose a Strike Price | |
| Lesson 2 | Video: Choose a Strike Price (5:42) | |
| Lesson 3 | Quiz: Choosing a Strike Price | |
| Lesson 4 | Assignment: Choose a Stock and Analyze Its Chain Sheet | |
| Module 3 | Choosing an Expiration Date | |
| Once you have determined which strike price you would like to sell when creating your covered call, you next need to decide which expiration date to sell. Making this determination will affect how much immediate income you can generate from the trade and how long you are going to be obligated to sell your stock if the call buyer decides to exercise the option. | ||
| Lesson 1 | Reading: Choosing an Expiration Date | |
| Lesson 2 | Video: Covered Call Expiration Date (5:23) | |
| Lesson 3 | Quiz: Choosing an Expiration Date | |
| Lesson 4 | Assignment: Analyze Profit Potential Based on Expiration | |
| Module 4 | Executing a Covered Call Trade | |
| Now that you have a good understanding of the basics of how options work and how to select an effective strike price and expiration date for a covered call, it is time to learn how to execute the trade. | ||
| Lesson 1 | Reading: Execute a Covered Call Trade | |
| Lesson 2 | Video: Executing a Covered Call Trade (3:03) | |
| Lesson 3 | Quiz: Executing a Covered Call Trade | |
| Lesson 4 | Assignment: Paper Trade a Covered Call | |