How to execute a covered call When you sell a covered call, you want to buy 100 shares of stock and then sell a call against it. This lowers your total breakeven price because you're bringing in money from the premium that you are taking in to sell the call. Also, if you're unsure of how to trade using covered calls, I recommend paper trading this strategy over and over again until you start to see how the stock moves. That way you'll know the full scope of how this trade becomes profitable. Once you understand how covered calls work, you can replicate them over and over again. Say you want to own several stocks but can't afford the options, covered calls are a way to have your cake and eat it too. How you can lose on a covered call The only way you can lose money on a covered call if the stock plummets past your initial entry price. But because covered calls are designed to give you a massive cushion, you can reduce your cost basis. This makes them a consistently safe option since the only way to lose is in a rare black swan event. YOUR ACTION PLANCovered calls are a great strategy for traders if they want to own several stocks at a cheaper price. Once you learn how to trade them, it's a strategy you can use for the rest of your life. We recently issued a covered call trade in Catalyst Cashouts. Click here to unlock our latest trade today.
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