Covered Call
Covered Call is one of the most commonly used strategies in my options trading. Its primary advantage is that it can minimize the risk of the investment portfolio. I usually choose some high-quality stocks, such as $Apple (AAPL.US)$ $Microsoft (MSFT.US)$ $Amazon (AMZN.US)$ $Meta Platforms (META.US)$, and other well-known tech companies, and then buy or sell according to market trends. Then, with an existing long stock position, I sell an equal number of calls against the stock position. If the stock price goes up before the option expiration date, the call option will be exercised, and the stock position will be closed out, and I will sell the stock at the predetermined price. If the stock price falls, the trade will be invalid, but I still hold the stock position and the call option premiums.
I once held 150 shares of Apple stock. As the market outlook was positive, I wanted to earn more profit. Therefore, I decided to sell an equal number of Apple call options with a strike price of $130 per share, expiring in 60 days. I received a premium of $5 per share, totaling $750.
During the next 60 days, the Apple stock price fluctuated only slightly, but suddenly rose to $135 per share just a few days before the expiration date. Since I had already sold the call option, my position was closed out, and I sold my shares at the price of $130 per share. Therefore, I earned a total return of $1100, including $750 from the call option premium and $350 from the stock profit.
Even in volatile market conditions, this strategy can protect the position to the utmost and generate extra returns. Of course, any investment carries risks, but I believe that with the correct application of strategies and risk control, options trading can also become a very profitable investment method.
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