1. If you’re looking to earn some extra income from your investments, two popular stock option strategies are worth knowing: covered calls and cash-secured puts. They’re simple enough for beginners to understand and use, and they can be effective in steady or mildly rising markets. But how do high yield etf calculator know which one is right for you?
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3. Let’s start with a quick look at what each one means.
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5. A covered call is when you already own shares of a stock and you sell a call option against those shares. What you’re doing here is giving someone else the right (but not the obligation) to buy your shares at a set price within a set time. In exchange, you get paid a fee—this is called the premium. This strategy works well if you think the stock will stay flat or go up just a little. You keep the premium, and if the stock doesn’t go above the strike price, you also keep your shares.
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7. If you’re curious about funds that use this strategy, check out https://dividendstacker.com/covered-call-etfs for some examples that don’t require you to trade options on your own.
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9. Now, let’s talk about cash-secured puts. This is kind of like the flip side of a covered call. You agree to buy a stock at a certain price (the strike price) by selling a put option. In return, you get paid a premium. If the stock stays above the strike price, the option won’t get used, and you keep the cash. If the stock falls below that price, you’ll likely have to buy it—but remember, you already set money aside (that’s the “cash-secured” part), so you’re prepared.
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11. Which is better? It depends on your goals and your view on the stock. If you already own shares and wouldn’t mind selling them at a slightly higher price, covered calls are a great choice. If you like a stock and are happy to own it at a discount, cash-secured puts might be the way to go.
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13. Either way, both can help you earn a little income while keeping risks manageable. They take some time to learn, but once you get the hang of them, they might just become a useful part of your investing plan.
14. My website: https://dividendstacker.com/covered-call-etfs