Covered Call option wrote:
> Hi Mark,
> I have not understood the Covered Call Option. Can you
> provide a simple example.
> Kumar,
> Example:
> Buy 300 shares of QCOM, paying 43.39.
> Sell (write) 3 May 45 calls, collecting a premium of $1.10 for each. This is $1.10 per share, or $110 per contract. You pay for the stock and you keep the $330 cash from the option sale.
> The option owner now has the right to buy your 300 shares - any time from now until the option expire in May - at $45 per share. If the other person chooses to buy your stock you must sell. If the other person decides not to buy your stock (May 18, 2007 is the last day that he has the right to buy your stock), then you keep your stock and the $330.
> Mark

Mark D. Wolfinger
Create Your Own Hedge Fund: Increase Profits and Reduce Risk With ETFs & Options