How to execute a covered call trade... Pick out your net debit price - the net amount you want to pay for the stock. Buy to open (opening trade) the stock. Or sell to open (opening trade) the option. Enter your net debit price. Sit back and enjoy if it is deep in the money (strike price well below the current share price) or sit back and feel a little nervous if the strike price is above the current share price. At expiration, if the share price is above your cost, you win. If it's below your cost, you lose. If the share price is above the strike price, your shares get called away automatically. If not, you can either sell the shares or sell more calls to reduce your cost further.
This strategy for call trades sounds confusing at first since most people focus only on making money from a stock going higher. But, as this bear market has shown us, stocks go down as well. So it's good to have this strategy in your back pocket. YOUR ACTION PLANToday, we executed a covered call trade in The War Room, targeting 22% upside with a 40% downside cushion. So we are planning to make 22% on this trade with a 40% cushion to the downside. I will take those odds any day! Safe, disciplined trades like these are the reason War Room members are having an amazing trading week. In the last five days alone, we've closed 15 winners out of 16 trades for a 94% win rate - despite a brutal market. Click here to unlock those trades. | 
No comments:
Post a Comment