1. Writing covered calls

Now to deal with writing covered calls. When we sell a call on a stock we own, the only thing that can go wrong is with the stock itself. The stock can go down. But we already have that risk. Selling a call does not increase the risk on the stock. It does tie up the stock however, for the duration of the call. There is NO risk on the call itself. We receive the premium into our account the next day when the call is sold. That cannot be taken from us.

A covered call can be written three ways:

1. Buy the stock and sell the call at the same time.
2. Buy the stock and sell the call at a later time.
3. Sell the call on stock we already own.

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