Covered Call Strategy – Explanation

Both beginners in trading with binary options as well as experienced traders are eager to take advantage of the covered call strategy when it comes to securing an investment. Investors acquire the call option simultaneously with etoro the underlying. While this is kept, it also covers the call option with its financial volume. The profit, on the other hand, is to be generated with the call option.

The biggest advantage to the investor is the fact that he enters the covered call after a price drop and does not sell until the underlying has risen again. Theoretically, the investor could now buy the underlying, but the covered call represents the cheaper alternative. The covered call strategy Copy Trading emerged around the middle of the 20th century, when the trade with classic warrants came to its absolute heyday.

Table of Contents:

  • To the Covered Call?
  • Conclusion about the Covered Calls
  • How the Covered IQ Option Call is performed

    Investors who rely on the covered call primarily hedge transactions with shares or index futures. The underlying assets can even be combined with an actively managed option portfolio, which is often offered by banks as well.

    In order to actually achieve a better return against the underlying underlying, covered calls should be bought at price declines. The sale is recommended, however, if a significant profit can be taken. In this case, the investor can make the best return with Social Trading an active stop-gap management.

    Frequently short-term options are purchased in the form of covered calls. These show a strong movement in a price increase, can be sold at a profit and replaced by new warrants. If the share price drops, the covered call loses its course accordingly, so that a risk of loss is fundamentally omnipresent. However, the investor can minimize this risk by 24option maintaining the underlying value as long as he expects a further increase. This can also be already in the profit zone if the investor still buys covered calls.

    Graphic: Out-of-the-Money Covered Call (Strategy):

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    click now up When are Covered Calls worth?

    It is advisable to anyoption book covered calls to a specific value only if the investor wants to hold the corresponding value over a longer period because he believes in a generally positive trend, despite the possibility of a temporary decline in prices. The calls should however only be purchased after a price drop. This is also worthwhile insofar as the covered calls are a pure warrant-of-equity strategy. This means that the options can be purchased very favorably without the investor having to accept the risk of a knockout.

    However, if you combine covered calls with CFDs, binary options, or knock-outs, you must be aware of the fact that calls can be regularly lost. plus500 For a drop in prices, they can also become worthless. On the other hand, they are only subject to an extremely weak decline in value.

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This entry was posted on 8. February 2017.