How much money do I need to effectively
write covered calls?
The cheapest stocks with options available
are around five to six dollars. Both Call and Put options
are sold in "contracts"
which represent 100 shares of stock.
So the cheapest possible way to sell
covered calls is to buy 100 shares
of a $5 stock with options available
and sell one Call option contract.
Realistically, three to five thousand
is minimum amount needed to be effective
in writing covered calls. The more
money available, the higher the value
of the stocks you can purchase for
selling covered calls. The higher
the value the stocks, generally the
higher the chances that the company
is a quality firm and less prone to
significant risks.
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