call option trading

Option Strategy: Covered Call

In covered call strategy call option is sold against already own stocks. Professional investors write covered calls to increase their investment income. For example, assume that on 01, January a trader Mr A owns 100 shares of XYZ company. XYZ currently trading at Rs 100 but Mr. A pretty sure it will stay below Rs 105. To generate a little bit of extra income, he sells Mr. B a call option with February expiration date and a strike price of Rs 105. The Call option is priced at Rs 3 per share and it controls 100 shares. By selling the call option, Mr. A receives a Rs 300 premium today in exch...
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