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Options made simple: A beginner's guide to trading options for success by Jacqueline Clarke

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Chapter 11: Strategies for selling covered call options

Selling call options can be high risk or quite conservative, depending on whether you own the underlying stock or not and how you structure your trade. If you sell call options and you own the underlying stock, you are selling covered call options. This is a conservative strategy with limited risk. If you sell call options and you do not own the underlying stock, you are selling uncovered or naked call options. This is a high risk strategy with potentially unlimited risk.

In this chapter we will discuss the general characteristics, advantages and disadvantages of selling covered call options. We will also discuss several different strategies that can be used and the risks attached to ...

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