The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to go through my ultimate quick guide to trading covered calls. Now, covered calls are a favorite option strategy for those who are bridging the gap between being a regular stock trader and starting to convert into an options trader. And this is why I like covered calls because they truly are the bridge between the gap in equity traders and options traders. Covered calls are simply the option strategy that is designed around stock ownership. It requires that you actually own underlying shares of stock and then what you would do is sell a call option out of the money and use the proceeds from that call option to reduce the cost basis on your stock ownership. Now, it’s called a covered call because the call option that you sell is covered by the underlying shares that you already own in your account and this is opposed to say a naked or a single leg call option, in which case, you would be uncovered if