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Leveraging covered call options in opportunistic scenarios may augment overall portfolio returns while mitigating risk. Options are a form of derivative trading that traders can utilize in order to initiate a short or long position via the sale or purchase of contracts. In the event of a covered call, this is accomplished by leveraging the shares one currently owns by selling a call contract against those shares for a premium. Traders may also initiate a short or long position via the purchase of option contracts to the underlying security. An option is a contract which gives the buyer of the contract the right, but not the obligation, to buy or sell an underlying security at a specified price on or before a specified date. The seller has the obligation to buy or sell the underlying security if the buyer exercises the option. An option that gives the owner the right to buy the security at a specific price is referred to as a call (bullish); an option that gives the right of the owner to sell the security at a specific price is referred to as a put (bearish). I will provide an overview of how a covered call is utilized and executed. Further details focusing on optimizing stock leverage (covered calls) and the ability to sell these types of options in a conservative way to generate cash in one’s portfolio will follow. Continue reading "Leveraging Covered Call Options To Augment Returns And Mitigate Risk" →