GE is a great underlying for options. But not a stock for beginners. SPY is better for those starting out.
TheGoon: I did a google query on 'SSF covered call' to see if someone has written up a definitive explanation of all the issues and the only two items that came up were both by me. I am amazed that it has not caught on since it raises yields so dramatically. I have been doing them for about about six months now and have had no problems. I usually make the option and SSF both have the same expiration so that on Monday morning after expiration the whole thing is gone. Your three points are well taken. IRA: One of my message board correspondants has tried doing the SSF covered call and indeed his broker's software does not recognize that the SSF covers the short call. I use IB and have had no problem. So it will depend on the broker...I would expect everyone to catch up eventually. Bid/Ask Spreads: The spreads can indeed be quite large. Less so with highly liquid stocks (like GE) more so on the less frequently traded ones. It hasn't bothered me much since I take the whole package to expiration 99% of the time. If you are called you will indeed end up long the SSF and short the stock. As you stated such a situation is completely hedged and you can carry that position into expiration and find the long/short pair disappear. It could make you liable for dividends but there is an aspect that usually mitigates that: Since the stock gets dividends and the SSF does not you usually get the SSF at a discount to the stock by the amount of the dividend. So if there is a dividend in the time frame of your CC you have been prepaid the dividend in the form of a cheaper SSF. There is one other issue here and that is paying interest on the short stock. If you are called and find yourself short the stock/ long the SSF you will be paying interest on the borrowed shares until expiration if you do not close out.