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This is what the Amplify CWP Enhanced Dividend Income ETF does, but on a tactical basis, picking and choosing the best covered call options to write, and when, across its entire stock portfolio.
A covered call is a basic options strategy that involves selling a call option (or “going short” as the pros call it) for every 100 shares of the underlying stock that you own. It’s a ...
The covered call is one of the best options strategies for new traders because it limits risk and can deliver income. ... If the stock falls, the call expires worthless and the put rises in value ...
A covered option is a financial transaction in which the holder of securities sells (or "writes") a type of financial options contract known as a "call" or a "put" against stock that they own or are shorting. The seller of a covered option receives compensation, or "premium", for this transaction, which can limit losses; however, the act of ...
The writing of the call option provides extra income for an investor who is willing to forego some upside potential. The BXM Index is designed to show the hypothetical performance of a strategy in which an investor buys a portfolio of the S&P 500 stocks, and also sells (or writes) covered call options on the S&P 500 Index.
Option values vary with the value of the underlying instrument over time. The price of the call contract must act as a proxy response for the valuation of: the expected intrinsic value of the option, defined as the expected value of the difference between the strike price and the market value, i.e., max[S−X, 0]. [3]
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