Covered calls are one of my favorite ways to generate income. I think of covered calls as a kind of “bonus” dividend, since they let me generate income from my holdings if a stock isn’t really moving.
With covered calls, you are selling the right to someone to buy the stock you hold at a given price on or before a given date. This means if the stock never rises about that price, you get to hold onto the stock.
Even better, by selling the right for someone else to buy the stock, you have collected a premium. You get to keep that premium if the stock is not “called away,” and that’s where my notion of covered calls as a bonus dividend comes from.
If the stock gets called away, you just hope the stock doesn’t end up trading at or above the price you sold it at plus the premium you received. (That doesn’t mean you’ve lost anything, just that you’ve missed out on potential upside.)
These covered calls are for the Sept. 26 options expiration date. Because earnings reports are not due during this period, it means these stocks have little news to move on — ergo, you likely will collect the premium with little risk of the stocks being called away.