Covered calls have always appealed to me as a way to generate income.
If you hold a long position — particularly in a stock that already pays a dividend — you can generate your own dividends by selling calls against your position. You risk the stock being called away, but if you choose your stocks carefully, they either won’t get called or they’ll get called just slightly above the strike price.
To me, that’s a win-win situation.
This week’s grouping of options trades meant to bring in at least $1,000 in income by next month includes covered calls on Amgen (NASDAQ:AMGN), JPMorgan Chase (NYSE:JPM) and the PowerShares QQQ Trust (NASDAQ:QQQ).