Newbie Question about covered calls.

Discussion in 'Options' started by jkgraham, Apr 11, 2011.

  1. Cliffs notes on this?
     
    #11     Apr 11, 2011
  2. Rolling means you buy back one option and sell another one. Rolling can be done in time (May to June for example) or price (buy one strike, sell a different one). If you roll in time, it's a "Calendar"; a roll in strike is a "Vertical", and both at the same time is a "Diagonal"
     
    #12     Apr 11, 2011
  3. Coverel Calls reduce your risk and potentially your reward in case the stock rallies very strong.

    When selling options you come to the understanding that this is a system that works for the long run and it focuses more on cash flow and income rather than capital gains.

    You can sell options 'out of the money' and by that you will potentially have more room for gains if the stock. however the premium you receive won't give you much protection in case the stock sells off..

    I hope this helps.
     
    #13     Apr 13, 2011