|Fidelity's Probability Calculator may help determine the likelihood of an underlying index or equity trading above, below, or between certain price targets on a specified date. Watch this video to learn how to use the calculator and view information that may be used to refine your stock or option strategy.||
If you are not familiar with call options, this lesson is a must. Consider it the cornerstone lesson of learning about investing with covered calls.
Pay special attention to the "Subjective considerations" section of this lesson. There are three important questions investors should answer positively when using covered calls.
Investors should calculate the static and if-called rates of return before using a covered call. This lesson will show you how.
A covered call is an options strategy where an investor holds a long stock position and sells call options on that same stock on a share-for-share basis in an attempt to generate income.
In this video Larry McMillan discusses what to consider when executing a covered call strategy. Pay special attention to the possible tax consequences.
In this section, Probability of being assigned, take note of the table explaining the mathematical probabilities of assignment.
The Probability Calculator may help you select a strike price by analyzing the likelihood of the underlying stock trading at or between price targets on a specified date based on historical volatility.
In this lesson you will learn how to sell covered calls using the option trading ticket on Fidelity.com. The option trading ticket will help you find, evaluate, and place single or multi-leg option orders.
Now let’s learn how to execute your trade using the option trading ticket in Active Trader Pro®. You can enter single or multi-leg trades and analyze the potential profit, loss and breakeven points within the trade ticket.
Stock prices do not always cooperate with forecasts. Also, forecasts and objectives can change. As a result, investors who use covered calls should know about the basic “rolling” techniques in case they are ever needed.
Investors who use covered calls should seek professional tax advice to make sure they are in compliance with current rules.
Use this checklist to helps to ensure consistency and completeness before executing your covered call strategy.
Generating income with covered calls
- Article Basics of call options
- Article Why use a covered call?
- Article Anatomy of a covered call
- Video What is a covered call?
- Video Expert recap with Larry McMillan
- Article Selecting a strike price and expiration date
- Video Using the probability calculator
- Video Selling a covered call on Fidelity.com
- Video Selling a covered call in Active Trader Pro®
- Article Rolling covered calls
- Article Tax implications of covered calls
- Course Generating Income with Covered Calls - Checklist
Options at Fidelity
Options research helps identify potential option investments and trading ideas with easy access to pre-defined screens, analysis tools, and daily commentary from experts.
Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read Characteristics and Risks of Standardized Options. Supporting documentation for any claims, if applicable, will be furnished upon request.