š” Options Trading Trick: The āCovered Callā Strategy š”
š What is a Covered Call?
A Covered Call is an easy, low-risk strategy where you earn extra money (called a premium) from assets you already own by selling a call option. Letās break it down:
š How Does It Work?
1ļøā£ You Own the Asset: First, you need to own some shares of a stock or cryptocurrency (like Bitcoin, for example).
2ļøā£ Sell a Call Option: You then sell a "call option" to someone else. This gives them the right to buy your asset at a specific price (called the "strike price") within a set period. You charge them a fee (the premium) for this right.
3ļøā£ Collect the Premium: If the asset's price stays below the strike price by the expiration date, you keep the asset and the premium fee.
4ļøā£ What If It Goes Up?: If the asset price rises above the strike price, you have to sell it at that agreed price, but you still keep the premium as extra profit.
š Example:
You own 1 Bitcoin (BTC), which is currently worth $35,000.
You sell a call option with a strike price of $40,000.
Someone pays you $500 premium for the right to buy your Bitcoin at $40,000 within the next month.
Scenario 1 (Price stays below $40,000): If Bitcoinās price stays below $40,000 by the end of the month, you keep your Bitcoin and the $500 premium. Easy money! š°
Scenario 2 (Price goes above $40,000): If Bitcoinās price jumps to $42,000, youāll sell your Bitcoin at $40,000 (lower than market price) but still keep the $500 premium. You might miss some of the gains but still made profit! š„
š Why Use a Covered Call?
Extra Income: Earn extra cash (the premium) while holding on to assets you already own.
Lower Risk: Since you already own the asset, you wonāt lose as much as riskier options strategies.
Great in Stable Markets: This is best when you believe the price wonāt go up too fast or stay relatively stable.
š¼ Start Earning with a Covered Call ā Simple, Safe, and Profitable!
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