Interestingly, the calls might be entitled as covered ones, owing to the fact that you own some stock and if you are trained you should definitely complete this trade you have started some time ago. In case you do not own anything, then you risk to be exposed to the high stock prices as well as ridiculously expensive charges. Besides, some one can mention naked calls. In reality, this is about the way of trading the market, when you do not possess many funds, but at the same time you have a healthy understanding about its work and functions. What is more a special trading plan can guide you and help to sell covered calls on options you have purchased. However, it is possible that you cannot afford to purchase big enough stock, as it is likely to cost you about $30.00 per share. Imagine you are able to purchase a call on the same stock and sell calls against it. In this case you are definitely accomplishing so called covered calls without owning the stock. At the same time the most essential issue about this is that you have managed to protect your downside, because you have a good alternative to by the stock you are selling against if you tried to be exercised. Interestingly, the first thing to be memorized is in spite of the fact that you have managed to protect yourself against this risk, you have to know that right now you are still using something what is mentioned as time sensitive. In case you are dealing with an option with 3 months period, you must move on and purchase another one.
Actually, to understand how these calls work is really hard. If you happen to determine that because of trading plan and analysis you are going to have some risk, you can buy a call of 3 months value and afterwards to sell these calls each month against your previously purchased calls. Only due to these conditions you would be able to generate good money from the calls you sold. Besides, it is crystal clear that you are going to have you stock increased in value, because this stock has gone up during this period of time. Undoubtedly, you are encouraged to be extremely careful and attentive when you analyze the stock. The thing is that you have to observe whether this stock is going to work according to some stocks and are not able to function due to the other conditions. Of course, there going to be an extremely good stock which is not usually traded in big volumes which means that people who sell them do not possess any interest to create perfect option prices.
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