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1. There are a few new terms and concepts to learn when you f
about covered calls. They're not that difficult, and covered c
many ways to other investment concepts. It is important to fi
information and to understand as much as you can before
money. Covered calls can be a good money making source, b
fast path to instant riches. If you are looking to become wealt
this is probably not the right strategy for you. But if you ar
reliable way to earn recurring monthly income, then covered
choice.

2. Let's look at a few common questions that new covered ca

3. What are "covered calls"?

4. A covered call is a two-part trade. The first part is buying 100
stock. The second part is selling a call option against that stoc
control 100 shares, you sell 1 call option for every 100 sha
bought. The combination of being long the stock and shor
known as a "covered call". It is also called a "buy-write" trade
the stock and the write (or sell) the option)

5. Remind me what "long" and "short" mean in the conte

6. If you are "long" a stock then that means you own it. You bo
if it increases in value then you will make money. If you ar
means you have sold a stock that you do not own. In the futu
you will have to buy it back to "cover" your short p

7. Ok. But how do I make money?

8. You make money by selling call options to other investors.
(money) you receive is yours to keep, no matter what h
underlying stock. Once the option expires you can sell a

9. How do I know when to sell these?

10. Selling call options is a year-round activity. You can do it ev
generate income each month. The only time you don't wan
expect the stock to shoot up in the near term (perhaps just b
announcement where you feel it will be good news). Since
sold for 1-month time frames, and since most stocks don't s
month (at least, not every month), you can sell calls each m
regular premiums.

11. Investing in covered calls is not difficult. It is the most comm
investment strategy (Schwab says 84% of their option enable
covered calls). Having a good covered call screener at your s
time (much better than a manual spreadsheet). If you're not
stocks you already own then you're leaving money on the t

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