Introduction

Covered call writing provides investors with a way to compound their money each month rather than each year. Many covered call writers earn between 10% and 25% on their money each month, providing a good income stream on their investments. Instead of buying a stock and waiting for it to move, investors are able to buy a stock and take their profit "up front," and actually profit should the stock price not move or even fall slightly.

At the end of 6 years, an $8,000 investment, compounding at 7% a month in an IRA account, would be worth over $1,000,000 dollars. When writing a covered call, investors purchase a stock and agree to sell it to someone at a given price (strike price). In return for this agreement, the investor is paid a premium (option price). Options are traded on five different exchanges and expire on the third Friday of each month.

1. Introduction
2. Definition
3. Understanding Options
4. Key Terms
5. The Basic Concept
6. The Simplified Covered Call Process
7. Benefits of Covered Call Writing
8. Risks of Covered Call Writing
9. Calculating A Return
10. Getting Started