There are a few things you should know before investing your money in covered calls. Know in detail?

Experts usually tell everyone that it is important to invest some of your unused money securely and properly. Let your hard earned dollars work for you to be able to enjoy life to the fullest. When talking about investment, many people who have money on their pockets aren’t that sure if it is worth their time and effort. Many doubt the power of investment and how to run their money well. But based on experts, there are many kinds of investments that are worth the risk. One investment that many experts are very well aware of is covered call.

For someone who hasn’t heard covered call, they could think that this is like a direct calls to and from other countries. Well, in talking about investment that is way different from making direct calls. Covered calls are one of the investment strategies that experts do. You won’t have the opportunity to make big quick cash in just a short period of time. This is an income oriented approach and ensures you that money will come slowly but surely.

What are your requirements when write a covered call?

The first thing that you must have is a brokerage account. You need to have permission to writing covered calls. Many accounts will allow writing covered calls in default mode or there just complete an easy form so that you can write and sell call options. You even have at the very least 100 stocks or if you do not have one, you need to have the cash to buy them. The last but not the least is your portfolio and trade selection services.

You also need to get acquainted with terms like short and long before you start investing. When talking about long is when you bought and own that specific share and you will receive profit if the worth of the stocks rises. Short is selling a share even if you do not own it. Investors use short technique if they believe that its value will decrease or depreciate. In the long term, the investors will have to buy that share they sold for a lesser price. This is where investors get their income or profits in the long run.

For a covered calls investing, you get two options which are calls and puts. Call option is when the owner of the share decides to sell it and the buyer has the right to ask for the price which is called a strike price before the share will expire. Just like with other investment opportunity, this too has its own risk and failures. It is essential so that you can know the risk and know this investment better.