How to Write a Covered Call Option (go short)

Video Transcript

"My name is Phillip Beningaso. I'm an investment profession and I'm going to be discussing how to write covered call options. Again, let me start with saying that options is really not for everyone. It's a, can be a very risky strategy but it can also be a very beneficial strategy. If you want to get small but steady profits from your stock holdings, you can use options or what's called cover writing or call options.The profit potential is limited only by the up side. Again, if you have the stock, you can utilize this stock to pin that position and only make a small amount of gain and take a very small amount of risk. Let me follow a few simple steps here for you that will make this process a little bit simpler for you. Step one is to ask your on line brokerage firm if they have an account such as an account that can write options in or have a full account for options. Two is to find out which of your stocks are optional. Not all your stocks are but most large ones that are traded on the New York Stock Exchange, Nasdaq, American Stock Exchange and a variety of other places have options for them. Step three is to decide which or what the expiration month is. Your option is going to be the further out you go or the longer the time frame for the option, the more expensive that option is going to be. But it can also depend on the strike press of that option. It's important that you get familiar with each type of contract. Again, each contract, each option contract is fulfilled by 100 shares of stock. One contract covers 100 shares of stock. Four is to practice some examples. This is going to be very important. Practice examples. That familiarizes yourself with all the strategy being able to cover with push and to be able to sell covered calls. That way you are utilizing profit potential but protecting yourself on the downside. Any information that is provided here is for general informational purposes only and should not be considered a individualized recommendation or personalized investment advice. Any investments or strategies mentioned here may not be suitable for everyone. My name is Phillip Beningaso and I'm an investment professional."