With a new calendar month comes another round of trying to earn $1,000 in options premium income via covered calls.
My $1,000 mark is somewhat arbitrary. You can always earn premium income from options; a grand just happens to be a number I can generate given the size of my portfolio. But to hit this target, you probably need more than $50,000 in aggregate assets (and having some margin available can’t hurt).
I like covered calls because I traditionally only will use them on stocks that I either want, or don’t mind holding for an extended period of time. These are solid, world-class companies that are executing well and growing earnings. If we hit a market correction while I have calls sold against some or all of my position, I’m happy to hold the stock. Plus, I’ve offset some of the downside by collecting the premium on the covered calls.
If the stock gets called away, I might miss out on some of the upside. That’s why I usually only sell covered calls against half my position.
Now, onto the options.