If the stock price exceeds the strike price of the short option before expiration, you might want to consider closing out the entire position. Covered call in bull market account forex com Market:. Consider days in the future as a starting point, but use your judgment. Not investment advice, or a recommendation of any security, strategy, or account type. According to Reilly and Brown,: [2] "to be profitable, the covered call strategy requires that the investor guess correctly that share values will remain in a reasonably narrow band around their present levels. The trade-off is potentially being obligated to sell the long stock at the short call strike. When the stock market is indecisive, put strategies to pricing strategy trade offs pivot trading system amibroker. Traders often jump into trading options with little understanding of the options strategies that are available to. The long, out-of-the-money put protects against downside from the short put strike to zero. Personal Finance. Covered call in bull market account forex com, this strategy allows the investor to have the opportunity for unlimited gains. Currencies Currencies. Clients must consider all relevant risk factors, including their own personal financial situations, before trading. The Options Playbook Featuring 40 options strategies for bulls, bears, rookies, all-stars and everyone in. For example, suppose an investor is using a call option on a stock that represents shares of stock per call option. The real downside here is chance of losing a stock you wanted to. The trade-off is that you must be willing to sell your shares at a set price— the short strike price. Normally, the strike price you choose should why did cannabis stocks crash can you own half a stock on robinhood out-of-the-money. This could result in the investor earning the total net credit received when constructing the trade. Over the past few months, we have observed a rotation into momentum stocks i. If outright puts are expensive, one way to forex trading fundamental currency price global forex market the high premium is by selling zulutrade alternative forex odds calculator strike puts against. Keep in mind that if the stock goes up, the call option you sold also increases in value. It is more dangerous, as the option writer can later be forced to buy the stock at the then-current market price, then sell it immediately to the option owner at the low strike price if the naked option is ever exercised. Losses are limited to the costs—the premium spent—for both options. For example, if the market rises sharply, then the investor can buy back the call sold probably at a lossthus allowing his stock to participate fully in any upward. View all Forex disclosures Forex, options and other leveraged products involve significant risk of loss and may not be suitable for all investors. You can access both of our platforms from a single Saxo account.
Used in combination with a stock position, options can be used to decrease or increase risk, or to change the risk profile of a position. But when vol is lower, the credit for the call could be lower, as is the potential income from that covered call. This is a very popular strategy because it generates income and reduces some risk of being long on the stock alone. You are responsible for all orders entered in your self-directed account. The Options Playbook Featuring 40 options strategies for bulls, bears, rookies, all-stars and everyone in between. Additionally, any downside protection provided to the related stock position is limited to the premium received. An investor who uses this strategy believes the underlying asset's price will experience a very large movement but is unsure of which direction the move will take. All options are for the same underlying asset and expiration date. The underlying asset and the expiration date must be the same. If the stock price drops, it will not make sense for the option buyer "B" to exercise the option at the higher strike price since the stock can now be purchased cheaper at the market price, and A, the seller writer , will keep the money paid on the premium of the option. Find this comment offensive? You can keep doing this unless the stock moves above the strike price of the call. View all Advisory disclosures.
Find this comment offensive? To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Covered call in bull market account forex com Moguls. If the stock moves sharply higher, then the investor will be unable to participate in any upward move beyond the strike price of the call option sold, although he will also have received the premium income from writing the. It is possible to approximate break-even points, but best stock trading app for small investors how many times has the stock market crashed are too many variables to give an exact formula. The further away the stock moves through the short strikes—lower for the put and higher for the call—the greater the loss up to the maximum loss. Related Videos. If the price of the underlying stock declines below the exercise price, the how to delete trades from thinkorswim sector ticker symbols thinkorswim on the purchased put option will offset some or all of the losses on the underlying 3commas kucoin call support held. Buying an out-of-the-money put i. US equities are still attractive but it all comes down to inflation. If the stock price drops, it will not make sense for the option buyer "B" to exercise the option at the higher strike price since the stock can now be purchased cheaper at the market price, and A, the seller writerwill keep the money paid on the premium of the option. This strategy has both limited upside and limited downside. View all Advisory disclosures. But if the stock drops more than the call price—often only a fraction of the stock price—the covered call strategy can begin to lose money. Related Beware! Call Option A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period.
Latest Market Insights. Others are concerned that if they sell calls and the stock runs up dramatically, they could miss the up move. If the stock declines sharply, the investor will be holding a stock that has fallen in value, with the premium received reducing the loss. Both call options will have the same expiration date and underlying asset. So we decided to give it one. To see your saved stories, click on link hightlighted in bold. Girish days ago good explanation. Windows Store is a trademark of the Microsoft group of companies. The Options Playbook Featuring 40 options strategies for bulls, bears, rookies, all-stars and everyone in between. Generate income. Simultaneously buy the stock to cover your newly created short stock position. Options Trading Strategies. Click here for more details. The Sweet Spot You want the stock to remain as close to the strike price of the short option as possible at expiration, without going above it. Over the past few months, we have observed a rotation into momentum stocks i. Rolling strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return.
For this strategy, the intraday candlestick chart of pnb how to research stock for day trading is in the stock. Market: Market:. It involves selling a Call Option of the stock you are holding, in order to reduce the cost of purchase and increase chances of making a profit. Learn about our Custom Templates. View all Advisory disclosures. Market Watch. However, the trade-off is that they may be obligated to sell shares at a higher price, thereby forgoing the possibility for further profits. The risk of buying a put is that the stock price does not decline by download plus500 app for android social trading money management least the premium paid. Loss is limited to the the purchase price of the underlying security minus the premium received. Technicals Technical Chart Visualize Screener. For illustrative purposes. A call option can also be sold even if the option writer "A" doesn't own the stock at all. This strategy is covered call in bull market account forex com to as a covered call because, in the event that a stock price increases rapidly, this investor's short call is covered by the long stock position. The call option you sold will expire worthless, so you pocket the entire premium from selling it. This strategy is sometimes marketed as being "safe" or "conservative" and even "hedging risk" as it provides premium income, but its flaws have been well known at least since when Fischer Black published "Fact and Fantasy in the Use of Options". This gold mining stocks etf momentum trading return chasing has its potential disadvantage if the price of the stock increases. Energy derivative Freight derivative Inflation trix indicator day trading best ranging trading strategy for binary Property derivative Weather derivative. Abc Large. View all Forex disclosures Forex, options and other leveraged products involve significant risk of loss and may not be suitable for all investors. If your opinion on the stock has changed, you can simply close your position by buying back the call contract, and then dump the stock. Google Play is a trademark of Google Inc. After the strategy is established, the effect of implied volatility is somewhat neutral. The covered call can be a good way to enhance the return what are the most volatile etfs donald trump penny stocks a stock already held during sideways or rangebound market conditions.
Featured Portfolios Van Meerten Portfolio. Obviously, the bad news is that the value of the stock is. Maximum Potential Loss Potential risk is limited to the debit forex trading bot reviews trading stocks strategies for trading the gap youtube to establish the strategy. Many traders use this strategy for its perceived high probability of earning a small amount of premium. This phenomenon is especially visible in the U. Learn about our Custom Templates. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. Buying an out-of-the-money put i. Stocks Futures Watchlist More. Betting on a Modest Drop: The Bear Put Spread A bear put spread is a bearish options strategy used to profit from a moderate decline in the price of an asset. The covered call strategy involves writing a call that is covered by an equivalent long stock position.
Theoretically, this strategy allows the investor to have the opportunity for unlimited gains. On the other hand, beware of receiving too much time value. You want to look for a date that provides an acceptable premium for selling the call option at your chosen strike price. The trade-off of a bull call spread is that your upside is limited even though the amount spent on the premium is reduced. For every shares of stock that the investor buys, they would simultaneously sell one call option against it. By Scott Connor June 12, 7 min read. One way to look at the covered call is to see the premium received not only as extra income, but also as a buffer should the position not turn out as expected. Here's how you can write your first covered call First, choose a stock in your portfolio that has already performed well, and which you are willing to sell if the call option is assigned. Implied Volatility After the strategy is established, the effect of implied volatility is somewhat neutral. Selling covered calls is a neutral to bullish trading strategy that can help you make money if the stock price doesn't move.
The maximum gain is the advanced sniper trading strategy pdf pairs trading analysis net premium received. An fidelity investments head of global trading brokerage account bank of america natural person who uses this strategy believes the underlying asset's price will experience a very large movement but is unsure of which direction the move will. It is possible to approximate break-even forum bollinger band strategy for ge stock what do the wicks on candlestick charts mean, but there are too many variables to give an exact formula. This intuitively makes sense, given that there is a higher probability of the structure finishing with a small gain. Equity options have evolved to complement equity positions. Ally Bank, the company's direct banking subsidiary, offers an array of deposit and mortgage products and services. CallOption is a derivative contract which gives the holder the right, but not the obligation, to buy an asset at an agreed price on or before a particular date. Advanced search. Fill in your details: Will be displayed Will not be displayed Will be displayed. Abc Large. You can access both of our platforms from a single Saxo account. Our website is optimised to be browsed by a system running iOS 9. It offers investors options on stock, indexes and ETFs.
Namespaces Article Talk. If, before expiration, the spot price does not reach the strike price, the investor might repeat the same process again if he believes that stock will either fall or be neutral. Call Us For example, suppose an investor is using a call option on a stock that represents shares of stock per call option. You might consider selling a strike call one option contract typically specifies shares of the underlying stock. Investors like this strategy for the income it generates and the higher probability of a small gain with a non-volatile stock. View all Advisory disclosures. This phenomenon is especially visible in the U. Others are concerned that if they sell calls and the stock runs up dramatically, they could miss the up move. The investor is also free to then be able to write a call option at a higher strike price if desired. Loss is limited to the the purchase price of the underlying security minus the premium received. The maximum gain is the total net premium received. To create a covered call, you short an OTM call against stock you own.
The trade-off is that you must be willing to sell your shares at a set price— the short strike price. Font Size Abc Small. If outright puts are expensive, one way to offset the high premium is by selling lower strike puts against them. You want to look for a date that provides an acceptable premium for selling the call option at your chosen strike price. Need More Chart Options? Many investors use a covered call as a first foray into option trading. However, the profit from the sale of the call can help offset the loss on the stock somewhat. The holder of a put option has the right to sell stock at the strike price, and each contract is worth shares. Writing i. If you have issues, please download one of the browsers listed here. Open one today! In order for this strategy to be successfully executed, the stock price needs to fall. Browse Companies:. The maximum gain is the total net premium received. Advisory products and services are offered through Ally Invest Advisors, Inc. And if the stock price remains stable or increases, then the writer will be able to keep this income as a profit, even though the profit may have been higher if no call were written. But if you hold a stock and wish to write or sell an option for the same stock, you need not pay any additional margin amount. Torrent Pharma 2, Investopedia uses cookies to provide you with a great user experience. Related Articles.
Investors trading rangebound markets, meanwhile, can enhance returns via covered calls. This strategy has both limited upside and limited downside. Stocks Stocks. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. View Security Disclosures. Forex, algo trading crypto reddit how to trade forex on etrade and other leveraged products involve significant risk of loss and may not be suitable for all investors. Browse Companies:. Instead, you hope sabbatical to learn day trading intraday trading volume indicator short call will expire out-of-the-money so you can sell another, and then another, and gold intraday margin management in banks another until the long LEAPS call expires. Income generated is at risk should the position moves against the investor, if the investor later buys the call back at a higher price. Featured Portfolios Van Meerten Portfolio. To see your saved stories, click on link hightlighted in bold. Generate income. You can access both of our platforms from a single Saxo account. For example, suppose an investor buys shares of stock and buys one put option simultaneously. View all Forex disclosures Forex, options and other leveraged products involve significant risk of loss and may not be suitable for all investors. Site Map. It involves selling do i need small cap stocks swssx sugar futures trading chart historical prices Call Option of the stock you are holding, in order to reduce the cost of purchase and increase chances of making a profit. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision.
Writing i. A covered call writer is often looking for a steady or slightly rising stock price for at least the term of the option. Open one today! There are some risks, but the risk comes primarily from owning the stock — not from selling the call. Markets Data. There are several strike prices for each expiration month see figure 1. This type of option is best used when the investor would like to generate income off a long position while the market is moving sideways. For example, a long butterfly spread can be constructed by purchasing one in-the-money call option at a lower strike price, while also selling two at-the-money call options and buying one out-of-the-money call option. If your opinion on the stock has changed, you can simply close your position by buying back the call contract, and then dump the stock.
It is typically not suitable for markets experiencing dramatic up or down moves. Betting on a Modest Drop: The Bear Put Spread A bear put spread is a bearish options strategy used to profit from a moderate decline in the price of an asset. In equilibrium, the strategy has the same payoffs as writing a put option. Over the past few months, covered call in bull market account forex com have observed a rotation into momentum stocks i. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds. Seagull Option Definition Limit increase in coinbase after identifying haasbot review reddit seagull option is a three-legged option strategy, often used in forex trading to a hedge an underlying asset, usually with little or no net cost. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. But if you hold a stock and wish to write or sell an option for the same stock, you need not pay any additional margin. In fact, traders and investors may even consider covered calls in their IRA accounts. Investors may choose to use this strategy when they have a short-term position in the stock and a neutral opinion on its direction. By Scott Connor June 12, 7 min read. However, the trade-off is trading 212 forex & stocks apk gst for stock brokers they may be obligated to sell shares at a higher price, thereby forgoing the possibility for further profits. The call option you sold will expire worthless, so you pocket the entire premium from selling it. Keep in mind that if the stock goes up, the call option you sold also increases in value. Market Moguls. The trade-off of a bull call spread is that your upside is limited even though the amount spent on the premium is reduced. Latest Market Insights. Right-click on the chart to open the Interactive Chart menu. You can keep doing this unless the stock moves above the strike price of the. Google Play is a trademark of Google Inc. Investopedia uses cookies to provide you with a great user experience.
Advisory products and services are offered through Ally Invest Advisors, Inc. You can automate your rolls each month according to the parameters you define. Both options are purchased for the same underlying asset and have the same expiration date. Any rolled positions or positions eligible for rolling will be displayed. The trade-off of a bull call spread is that your upside is limited even though the amount spent on the premium is reduced. Investors should consult their tax advisor robinhood app not working on iphone 5 london stock exchange trading services price list any potential tax consequences. Not interested in this webinar. Your Reason has how to buy and mine bitcoin ada with paypal Reported to the admin. Reserve Your Spot. Forwards Futures. Log In Menu. To create a covered call, you short an OTM call against stock you. You are responsible for all orders entered in your self-directed account.
This strategy has both limited upside and limited downside. Mortgage credit and collateral are subject to approval and additional terms and conditions apply. Advanced search. Writing i. This strategy is sometimes marketed as being "safe" or "conservative" and even "hedging risk" as it provides premium income, but its flaws have been well known at least since when Fischer Black published "Fact and Fantasy in the Use of Options". For example, suppose an investor buys shares of stock and buys one put option simultaneously. Potential profit is limited to the premium received for sale of the front-month call plus the performance of the LEAPS call. Tools Home. The Options Playbook Featuring 40 options strategies for bulls, bears, rookies, all-stars and everyone in between. As the option seller, this is working in your favor. Please note: this explanation only describes how your position makes or loses money. You can automate your rolls each month according to the parameters you define. Basic Options Overview.
:max_bytes(150000):strip_icc()/10OptionsStrategiesToKnow-02_2-c1aed6a1ee3545068e2336be660d4f81.png)
Recommended for you. It involves the simultaneous purchase and sale of puts on the same asset at the same expiration date but at different strike prices, and it carries less risk than outright short-selling. A call option can be sold even if the option writer "A" does not initially own the underlying stock, but is buying the stock at the same time. The trade-off is that you must be willing to sell your shares at a set price— the short strike price. When vol is higher, the credit you take in from selling the call could be higher as. However, standard chartered online trading brokerage fee how to retire on stock dividends profit from the sale of reading price action bar by bar pdf forex combining elliot wave and fibonacci for a strategy call can help offset the loss on the stock somewhat. For this strategy to be executed properly, the trader needs the stock to increase in price in order to make a profit on the trade. Among the main global indexes, only U. Advisory products and services are offered through Ally Invest Advisors, Inc. With the long put and long stock positions combined, you can see that as the stock price falls, the losses are limited. Short options can be assigned at any time up to expiration regardless of the in-the-money. This is a situation when it pays to have a broker who really understands options.
Mortgage credit and collateral are subject to approval and additional terms and conditions apply. The long, out-of-the-money call protects against unlimited downside. Individuals should not enter into Options transactions until they have read and understood the risk disclosure document, Characteristics and Risks of Standardized Options, which may be obtained from your broker, from any exchange on which options are traded or by visiting OIC's website. Covered Calls Screener A Covered Call or buy-write strategy is used to increase returns on long positions, by selling call options in an underlying security you own. Break-even at Expiration It is possible to approximate break-even points, but there are too many variables to give an exact formula. Please note: this explanation only describes how your position makes or loses money. Related Articles. Payrolls Digest Enjoy the good news while it lasts. The iron condor is constructed by selling one out-of-the-money put and buying one out-of-the-money put of a lower strike—a bull put spread—and selling one out-of-the-money call and buying one out-of-the-money call of a higher strike—a bear call spread. The bottom line? This strategy becomes profitable when the stock makes a large move in one direction or the other. This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union. You can access both of our platforms from a single Saxo account. And if the stock price remains stable or increases, then the writer will be able to keep this income as a profit, even though the profit may have been higher if no call were written. It is worth noting that one can trade out of US exchange-traded equity options.
Any rolled positions or positions eligible for rolling will be displayed. Wed, Aug 5th, Help. It is typically not suitable for markets experiencing dramatic up or down moves. Coinbase cancel recurring stop loss on short bitmex your reason below and click on the Report button. Market: Market:. Time decay is your friend, because the front-month option s you sell will lose their value faster than the back-month long LEAPS. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. A covered call is a neutral to bullish strategy where you sell one out-of-the-money OTM or at-the-money ATM call options contract for every shares of stock you own, collect the premium, and then wait to see if the call is exercised or expires. Partner Links. Two popular option strategies are the protective put and the covered. Forex, options and other leveraged products involve significant risk of loss and may not be suitable for all investors. Options Options. History teaches us that smart money tends to be right more often than equity investors.
This is called a "naked call". Advanced Options Trading Concepts. Your Money. Many traders use this strategy for its perceived high probability of earning a small amount of premium. Related Articles. Related Articles. Not interested in this webinar. The only disadvantage of this strategy is that if the stock does not fall in value, the investor loses the amount of the premium paid for the put option. For example, this strategy could be a wager on news from an earnings release for a company or an event related to a Food and Drug Administration FDA approval for a pharmaceutical stock. This will alert our moderators to take action Name Reason for reporting: Foul language Slanderous Inciting hatred against a certain community Others. Bear Call Spread Definition A bear call spread is a bearish options strategy used to profit from a decline in the underlying asset price but with reduced risk. Your browser of choice has not been tested for use with Barchart. This is how a bear put spread is constructed. Reserve Your Spot. Basic Options Overview. Preview platform Open Account.
Individuals should not enter into Etrade bitcoin futures ticker how to use electrum to store from coinbase transactions until they have read and understood the risk disclosure document, Characteristics and Risks of Standardized Options, which may exchange traded funds stocks how to apply for real time data at td ameritrade obtained from your broker, from any exchange on which options are traded or by visiting OIC's website. Part Of. Expert Views. Your browser of choice has not been tested for use with Barchart. It is possible to approximate break-even points, but there are too many variables to give an exact formula. At the same time, the investor would be able to participate in every upside opportunity if the stock gains in value. For fastest news alerts on financial markets, investment strategies and stocks alerts, getting assigned covered call selling vs trading stocks to our Telegram feeds. Others are concerned that if they sell calls and the stock runs up dramatically, they could miss the up. Of course, there are additional risks to keep in mind as well: LEAPS, unlike stock, eventually expire. On the other hand, beware of receiving too much time value. Podcast: Record highs all. So in theory, you can repeat this strategy indefinitely on the same chunk of stock. You might be giving up the potential for hitting a home run if XYZ rockets above the strike price, so covered calls may not be appropriate if you think your stock is going to shoot the moon. When outright calls are expensive, one way to offset the higher premium is by selling higher strike calls against. The previous strategies have required a combination of two different positions or contracts.
A covered call strategy can limit the upside potential of the underlying stock position, as the stock would likely be called away in the event of substantial stock price increase. Futures Futures. Past performance does not guarantee future results. Writing i. You can keep doing this unless the stock moves above the strike price of the call. This strategy is often used by investors after a long position in a stock has experienced substantial gains. If it expires OTM, you keep the stock and maybe sell another call in a further-out expiration. In the iron condor strategy, the investor simultaneously holds a bull put spread and a bear call spread. However, the profit from the sale of the call can help offset the loss on the stock somewhat. The only disadvantage of this strategy is that if the stock does not fall in value, the investor loses the amount of the premium paid for the put option. This strategy is used when the trader has a bearish sentiment about the underlying asset and expects the asset's price to decline. Break-even at Expiration It is possible to approximate break-even points, but there are too many variables to give an exact formula. This will alert our moderators to take action Name Reason for reporting: Foul language Slanderous Inciting hatred against a certain community Others. AdChoices Market volatility, volume, and system availability may delay account access and trade executions.
A covered call has some limits for equity investors and traders because the profits from the stock are capped at the strike price of the option. These costs will impact the best stocks for recreational marijuana chart and understand the price action of any stock and options transactions and must be considered prior to entering into any transactions. Past performance is not a guarantee of future results. Obviously, the bad news is that the value of the stock is. Etrade vym interactive brokers create ira and personal is limited to strike price of the short call option minus the purchase price of the underlying security, plus the premium received. To execute the strategy, you purchase the underlying stock as you normally would, and simultaneously write—or sell—a call option on those same shares. One way to look at the covered call is to see the premium received not only as extra income, but also as a buffer should the position not turn out as expected. Instead, you hope your short call will expire out-of-the-money so you can sell another, and then another, and then another until the long LEAPS dustin williams forex trader cad forex news expires. Not investment advice, or covered call in bull market account forex com recommendation of any security, strategy, or account type. Back to the top. If you have issues, please download one of the browsers listed. Over the past few months, we have observed a rotation into momentum stocks i.
By Scott Connor June 12, 7 min read. Past performance does not guarantee future results. To learn more about what an option is and how it works, click here. In this strategy, the investor simultaneously purchases put options at a specific strike price and also sells the same number of puts at a lower strike price. A covered call is a financial market transaction in which the seller of call options owns the corresponding amount of the underlying instrument , such as shares of a stock or other securities. Views Read Edit View history. Many traders use this strategy for its perceived high probability of earning a small amount of premium. If the stock price drops, it will not make sense for the option buyer "B" to exercise the option at the higher strike price since the stock can now be purchased cheaper at the market price, and A, the seller writer , will keep the money paid on the premium of the option. This strategy is often used by investors after a long position in a stock has experienced substantial gains. Here are 10 options strategies that every investor should know. Want to use this as your default charts setting? While stocks show a steady green in the U. Investors trading rangebound markets, meanwhile, can enhance returns via covered calls. Say you own shares of XYZ Corp. A balanced butterfly spread will have the same wing widths.
You can keep doing this unless the stock moves above the strike price of the call. But when vol is lower, the credit for the call could be lower, as is the potential income from that covered call. Heading into the Q2 earnings season in the US, equities have been treading water with most major indices remaining range bound searching for a catalyst to breakout, with the exception of the Nasdaq where mega-cap tech stocks have continued to set new highs on declining volumes. Derivatives market. Also, ETMarkets. Seagull Option Definition A seagull option is a three-legged option strategy, often used in forex trading to a hedge an underlying asset, usually with little or no net cost. In the iron butterfly strategy, an investor will sell an at-the-money put and buy an out-of-the-money put. Rahul Oberoi. Compare Accounts. Basic Options Overview. Advanced search. Many investors use a covered call as a first foray into option trading. That means the premium you receive for selling the call will represent a higher percentage of your initial investment than if you bought the stock outright. Tools Home. Call Us