A complete self learning reading course on the Covered Call options strategy
Free Covered Call Course - Introduction
Are you looking for a way to make a monthly residual income from your stocks even if they are going nowhere?
Yes, instead of allowing your stocks to sit there making no money for you, there is a way to collect an average of about 1% per month or 12% per year in residual income from your stocks
just by using the Covered Call options strategy!
The purpose of this free Covered Call reading course is to help complete beginners to options trading to begin to learn about the Covered Call strategy in a step by step manner. This reading
course will take you from the basics of how options work, all the necessary basic knowledge you need to know before being able to make your first Covered Call trade, how Covered Call works
and some common questions about Covered Calls.
Before going further, you may wish to bookmark this page so that you can return to it as and when you need to. It is recommended that you do not follow any of the links in the tutorials listed below
while you are reading in order to avoid delving too deep and too far and confusing yourself. All the tutorials you need to read in order to gain a full understanding of Covered Calls would be listed
below so you need not click on further while you are reading.
Content
How Options Work |
What is Options Trading |
How Call Options Work |
Writing Options |
Out of the Money Options |
Time Decay |
Covered Call |
Reading an Options Chain |
Deep ITM Covered Call |
Covered Call Questions
Free Covered Call Course Lesson 1
- How Options Work
The very first step in understanding how the Covered Call works is of course to first learn about how options work. Options is without doubt the most versatile and most powerful derivative instrument
ever created but is perhaps also the least understood. Most people who claims to understand how call and put options work probably only do on a very rudimentary level. In fact, all of the jargons and
terms commonly used in telling options beginners about how options work only serve to make it more confusing. As such, we developed the following tutorial to explain how options work in everyday terms
and using everyday examples so that after finishing the tutorial, you should have a very good understanding of how call and put options work, how they relate to real assets and also the "magic" they
can perform when used together creatively.
Tutorial 1:
How Options Works - Options Trading for Dummies
Free Covered Call Course Lesson 2
- How Options Work in More Technical Terms
Now that you have learned about how options work in layman terms and examples, it is time to bring it up just one small notch to applying those concepts that you have learned into a slightly more
professional framework and learn about three unique effects of options, the classes of options, do all stocks have options as well as other forms of options. This will further improve your understanding
of options and better prepare you mentally for the actual Covered Call tutorial.
Tutorial 2:
How Options Works - What Options Trading Is
Free Covered Call Course Lesson 3
- How Call Options Work (Indepth)
As Covered Calls deal mainly with call options, indepth knowledge of how call options works, how call options react to time decay (which is the very thing you are profiting from in a Covered Call),
how call options are priced (because that determines the profitability of your Covered Call) as well as knowledge of its advantages and disadvantages would be critical to your success with a Covered Call.
This tutorial covers all that and more.
Tutorial 3:
How Call Options Works Indepth
Free Covered Call Course Lesson 4
- Writing Options
The Covered Call is an options strategy that involves not buying options but "Writing" them. This means "Creating a new option and selling it to a buyer", which is to play "banker" in an options transaction.
So, instead of the one buying an options contract and betting on the outcome, you become the one creating and selling that contract to that person. How exactly does writing options work? How do you actually
write options? What are some of the advantages and disadvantages that you need to take note of?
Tutorial 4:
Writing Options
Free Covered Call Course Lesson 5
- Out of the Money Options
Covered calls involves writing out of the money call options on stocks. As such, now that you have understood indepth how call options work as well as how and what to look out for when writing options,
it is time to find out what out of the money options are all about. Since you will be writing out of the money call options in a Covered Call, how exactly do out of the money options behave? What is its
characteristic in relation to time decay? What happens when out of the money options expire? All these and more in this tutorial where you will learn indepth knowledge and out of the money options.
Tutorial 5:
Writing Options
Free Covered Call Course Lesson 6
- Time Decay
Covered Calls work by taking advantage of the time decay on out of the money call options. When you write an option, its value decreases as it approaches expiration. This is known as Time Decay. Even though
time decay can be a negative for an options buyer, it is actually a plus for the options writer as the decreased value becomes profit in you pocket. However, how does Time Decay behave in relation to the
out of the money call options that you will be writing in a Covered Call? Can time decay be measured? Understanding time decay and how it is measured allows you to choose the correct expiration month for
your Covered Calls, which is the next missing piece of the puzzle.
Tutorial 6:
Time Decay
Free Covered Call Course Lesson 7
- Covered Call Tutorial
With all the of the above background knowledge about what options are, how options work, how to write call options and what the implications may be, you are finally ready to learn about what Covered Call is.
In this Covered Call tutorial, you will learn about what Covered Call is, what it is capable of doing, how to calculate its maximum static and assigned profit, how to calculate its maximum loss and its
advantages and disadvantages. This is the core tutorial that is going to teach you about the Covered Call strategy itself.
Tutorial 7:
Covered Calls
Free Covered Call Course Lesson 8
- Reading an Options Chain
So, now that you are fully armed with the knowledge of how Covered Calls work and all its internal mechanics, do you know how an options chain look like? If you don't know how to read an options chain,
you won't be able to find and write that call option that you wanted to in the first place. So, here is a lesson on what an options chain look like, how it works and the different types of options chains
that are available.
Tutorial 8:
Writing Options
Free Covered Call Course Lesson 9
- Deep In The Money Covered Call
Now that you have learned what a basic Covered Call is, this tutorial shall introduce you to a different variant of Covered Call, known as the Deep ITM Covered Call or Deep In The Money Covered Call.
This is an advanced Covered Call that instead of writing out of the money call options, it writes deep in the money call options instead to produce a position that is as close to an options arbitrage
as it can get.
Tutorial 9:
Deep ITM Covered Call
Free Covered Call Course Lesson 10
- Common Questions About Covered Calls
Congratulations for getting to the end of this Free Covered Calls Course! I hope this course has helped you understand what Covered Calls are, how they work and how you can execute this options strategy.
However, you might still have some lingering questions about Covered Calls in your head right now so here are some common questions asked by real Covered Call traders and Covered Call learners like yourself:
"What Happens if Deep ITM Covered Call Gets Assigned Early?"
"Is Margin Needed For Covered Call?"
"How Can I Keep My Covered Call Stock From Assignment?"
"Is Covered Call The Safest Options Strategy?"
"Can a Covered Call be Combined with a Straddle?"