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How to make extra money from your Dividend stocks
Covered Calls I’ll show you how I’m making an extra $40-$100 weekly using a simple technique
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![How to make extra money from your Dividend stocks Covered Calls I’ll show you how I’m making an extra $40-$100 weekly using a simple technique [THREAD]](https://pbs.twimg.com/media/EdoTQulVoAATfY8.jpg "How to make extra money from your Dividend stocks Covered Calls I’ll show you how I’m making an extra $40-$100 weekly using a simple technique [THREAD]")
What is a covered call?
A covered call is a type of Options contract where you are agreeing to sell 100 shares of a given stock to someone else at a chosen strike price.
It’s considered “covered” since you do already own the 100 shares
A covered call is a type of Options contract where you are agreeing to sell 100 shares of a given stock to someone else at a chosen strike price.
It’s considered “covered” since you do already own the 100 shares
If the stock reaches the strike price, the buyer gets to buy your 100 shares at that price, and you get your premium!
If the stock does not reach the strike price, then the contract expires and is unfulfilled. You get to keep your 100 shares + the premium!!
If the stock does not reach the strike price, then the contract expires and is unfulfilled. You get to keep your 100 shares + the premium!!
I’ll be using $T as an example:
1. I currently own 203 shares of $T, therefore, I can do 2 contracts per week (each contract is 100 shares)
I need to look at my average cost, which for me it’s $31.40
1. I currently own 203 shares of $T, therefore, I can do 2 contracts per week (each contract is 100 shares)
I need to look at my average cost, which for me it’s $31.40
2. Now I will look at the current offers for selling calls!!
I want to specifically look for a strike price that is higher than my average cost!!
I chose this $31.5 strike price
The $0.11 next to it is where we make our money
I want to specifically look for a strike price that is higher than my average cost!!
I chose this $31.5 strike price
The $0.11 next to it is where we make our money
This is what we call a premium!!
We, as the sellers, earn this premium whether the contract is fulfilled or not
That is 11 cents per share, since our contracts have 100 shares, we will earn $11 for each contract!
In this case, since I’m selling two contracts, I’ll make $22
We, as the sellers, earn this premium whether the contract is fulfilled or not
That is 11 cents per share, since our contracts have 100 shares, we will earn $11 for each contract!
In this case, since I’m selling two contracts, I’ll make $22
**Make sure that you pay attention to the date of expiration all the way up top**
Also, make sure that you are at “Sell” and “Call”
Also, make sure that you are at “Sell” and “Call”
Once I commit to selling those two contracts, I instantly gain the $22 in premium
So, why is this beneficial
Well, it’s a win-win strategy
Contract Unfulfilled - You keep your 100 shares + the premium
Contract Fulfilled - You sell your 100 shares at a profit (since strike price is higher than average cost) + the premium
Well, it’s a win-win strategy
Contract Unfulfilled - You keep your 100 shares + the premium
Contract Fulfilled - You sell your 100 shares at a profit (since strike price is higher than average cost) + the premium
And, the contracts have expired
They were not fulfilled, therefore I got to keep all of my stocks
+
$22 in premium for free
They were not fulfilled, therefore I got to keep all of my stocks
+
$22 in premium for free
