Selling Covered Calls is a great way to make some extra money on a stock that you already own. When you sell a call you give another person the right to buy the stock from you at a certain price.
This could mean that you are going to be called out if the stock makes a big upward move in the near future, but it is still worth it.
If you like the idea of selling calls on your stocks here are some free stock tips which can help you out any time you decide to start writing covered calls.
1. Look at The Company
Checking out the financial situation of the company is always a good thing. And it is just as important when you are selling covered calls. If you sell a call and make 7% in one month it is meaningless if the stock goes bankrupt.
Also the appreciation of the stock can also be a very profitable advanture so looking for strong companies that will likely grow in the future is just a wise thing to do.
2. Look For Dividends
Adding dividend paying stocks to the mix can also be very powerful. This allows you to make money from the covered calls while at the same time make money from the dividends. It is a way to get much more from your efforts.
3. Buy Multiple Stocks
If you are going to create an account for the sole purpose of selling some covered calls then it is important to have multiple stocks in that account. This way if something happens to one company you always have others lying around.
4. Sell Out Of The Money
I like to sell out of the money covered calls on my stocks. This way the stock has to go up a little in order for you to be forced to sell it. If it does you would at least make some money off of the stock as well as the call.
