Are you looking to generate more income from your stock portfolio in a low-interest rate environment? Exercising options might be a strategy worth considering. This advanced investing technique, known as “overwriting” or call writing, involves selling call options on stocks you already own. Essentially, this strategy bets that the stock won’t see significant gains before the option contract expires.
At Extreme Investor Network, we believe in empowering investors with unique and valuable insights to enhance their financial success. Our team of experts recommends considering covered call strategies as a way to potentially increase returns in various market conditions. Covered calls have gained popularity in recent years due to their ability to outperform outright stock ownership in flat, down, and slightly up markets.
To help you get started with call overwriting, Bank of America has identified call options on stocks in the Russell 1000 index with mid-October expirations that offer at least 7% upside and a minimum premium of 5%. Some of the stocks on the list include Avis, Dick’s Sporting Goods, and Neurocrine Biosciences. Keep in mind that option prices can fluctuate, especially around corporate events like earnings reports, so it’s essential to monitor your positions closely.
It’s important to understand that options contracts can be exercised before their expiration, potentially resulting in your stock being called away. To manage this risk, investors can consider strategies like buying a call with the same details as the one written or rolling out their covered call position to a later expiration date. These tactics can help mitigate potential losses and enhance your overall returns.
At Extreme Investor Network, we aim to provide investors with cutting-edge strategies and actionable insights to navigate the complex world of investing. By leveraging advanced techniques like covered call writing, you can potentially enhance your portfolio returns and achieve your financial goals. Stay tuned for more expert advice and market insights to help you succeed in today’s dynamic investment landscape.