Covered Options
Writing Tips

Covered Options


Secrets to Writing Covered Options

  • Instead of selling stock outright, write a covered call; name your price and get an option premium too.
  • Instead of buying stock outright, write a put; name your price and get an option premium too.
  • Companies having recently announced stock splits tend to rise, creating excellent covered call buy-write opportunities.
  • Don't want to risk losing money?  The deeper ITM a covered option write is, the more likely the covered option will be exercised, the stock sold, and your cash freed.
  • Writing covered options on low priced stock (<$25) creates higher yield than writing covered options on higher-priced stock.
  • Writing near-month covered options results in higher yield than writing far-month covered options.
  • Using margin to buy shares increases yield on a covered call!
  • Profits grow faster if you write covered calls in your IRA.
  • If the market looks strong write covered calls; if the market looks weak write covered puts.
  • When writing covered calls focus on stocks with 'A' grade charts, covered puts 'F' grade charts.
  • Make your own picks.  There are hundreds of websites making recommendations, but they don't always have your best interest at heart.
  • The biggest mistake made by option writers is focusing on return instead of health of the underlying security.  The Option Yield Report is essential because it lists the highest yielding covered options, provides opinion and trend analysis on each, and ties online research tools to each option.
  • Biotech stock is very volitile; FDA approval or denial can change values 50% overnight.
  • Quotes become stale when an option has not traded recently.  Each option in our report has traded that day.
  • Avoid writing LEAPS and long-term options.  Write covered options that expire within 45 days.
  • Make more money by comparing options.


Become a Better Trader!

We offer an excellent free online course on investing and CBOE has a very good free option calculator.  An outstanding course, which explains options more fully, is The Options Course - High Profit & Low Stress Trading Methods and workbook.  An extremely valuable reference book is Options as a Strategic Investment.

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