To The Moon

Selling calls on spyd 20% return after buying 100 shares at same price at 6 months 

Say now $SPDR Portfolio S&P 500 High Dividend ETF(SPYD)$is around 37 sell the call at 38 for 6 months and get a $5 call option and then only need to pay $32 for the 100 shares which is 17% return 

Plus the 2 divindend before the excerise date which is around 18-19 % within the period it also covers the potential 20% downside for next year 

Selling a covered call means opening a contract that gives you the obligation to sell shares of a stock you already own, at a certain price (the “strike price”) up until a set date (“expiration date”). In exchange, you receive an upfront amount (the “premium”) for selling this contract. A typical short call option entails the obligation to sell 100 shares of the underlying stock, and the call is “covered” because you already own the shares you might have to sell.

Because you have this obligation and hold the stock, in general it is beneficial for the stock price to stay relatively flat or increase moderately, and undesirable for the stock price to fall significantly. Your maximum potential profit is limited, but your potential losses are limited too.

Here’s some lingo to describe how your short covered call option is performing relative to the stock price:

In-the-money: The stock price is above the strike price

At-the-money: The stock price is at the strike price

Out-of-the-money: The stock price is below the strike price

When might I use this strategy?

You might consider selling a covered call if you think a stock price will stay relatively stable or rise somewhat in the near future (i.e., you have a neutral-to-bullish outlook). You can only do this on Robinhood if you own enough shares in the underlying stock to cover the short call if it’s assigned.

One reason to use this strategy is to earn additional income on stocks you own. If you’re planning to hold the underlying shares anyway, selling covered calls can be a way to help generate income from the premiums you receive (aka to “monetize” your holdings). But there’s a tradeoff — You give up the potential to profit if the stock price soars above the strike price. When this happens, the call has the potential to be assigned. (Note: Calls are usually assigned at expiration, but can happen at any time beforehand.) Remember, you’re obligated to sell your shares at the strike price if the buyer chooses to exercise the option.

Selling a covered call can also be a way to help protect yourself if the stock price declines. The premium you received for the call can slightly offset your losses. Still, selling a call can’t protect you from losing money if the stock price falls below the breakeven price.@TigerEvents@TigerStars@Daily_Discussiondo feature my article for peopleto learn how to hedge potential losses and want a safer 10% gain