Covered Call Writing for Equity Options

What this video covers

• Why owning 100 shares while writing one call makes the position covered, and how the premium is received upfront
• How to calculate maximum gain as the strike price minus stock cost plus premium, and why the upside is capped
• How to calculate break-even and maximum loss, including the $50 stock, $55 call, and $3 premium example
• Why a covered call provides only partial downside protection, while a protective put is the answer for the best protection
• Why a neutral-to-slightly-bullish outlook fits the strategy, while a strongly bullish outlook conflicts with its capped upside
• How in-the-money American-style calls can be assigned early, especially before an ex-dividend date when the dividend exceeds remaining time value
• How owning the shares distinguishes a covered call from a naked call