In today’s video, what I want to do is give you some insight on how many covered calls you can sell at any given time. You might be wondering, ‘Well, I got 100 shares of stock. Can I sell more than one covered call?’ and the answer is yes.

So we’re going to break it down here in this video, and I’m going to share with you some thoughts about selling covered calls and how you can even sell more covered calls than you think – a little bit more advanced strategy, not too crazy, but I’ll give you some insight.

Before we get started, if you’re really interested in trading covered calls, check out the tradersfly.com website. I work with people for a long period of time for covered calls, so check out the coaching session there, and we put on sample trades, and you can also take a look at a course there for covered calls.

First Step — Let’s Look at Selling Covered Calls

When we look at trading covered calls, you’re really looking at, ‘Hey, I’ve got one contract, and I got 100 shares.’ One contract controls 100 shares.

What you’re doing with the covered call strategy is you’re buying 100 shares. So now, if the stock price goes up, well, you say, ‘Okay, well, I bought it here at $140. Well, I’m willing to sell that stock at $170.’

I’ll flat line right here so I don’t make any more profit beyond that, but I’m willing to sell that stock at that price. And it’s like, ‘Okay, great.’ But if it doesn’t hit that price, I get to keep, let’s say, $200 bucks. Okay, so every time that stock doesn’t hit that, you make $200 bucks, $200 bucks, $200 bucks.

In other words, if the stock stands still and doesn’t move or just wiggles a little bit, you get to make extra money. Whereas for most people, they just kind of own the stock, and then whatever goes up, you make it, if it goes down, you lose it. But in this case, if it goes up slow or even pulls back, you make $200.

In this case, if let’s say you’re losing $1,000 dollars on the stock, but you made $200 for that option contract, now you actually only lost $800 dollars. So you’re cushioning your losses.

Losing less is good, right?

So, let’s go ahead and look at this on the platform though because now it’s like, ‘Okay, well, how many can I really sell?’ Well, let’s check it out. And we’re going to go ahead and take a look. Okay, so let’s say I’m going in, and I want to do something on Lowe’s because I love Home Improvement. Okay, so we’re going to go in right here, and we’re going to go, and let’s say buy 100 shares. Okay, let’s analyze that. Okay, so now we’ve got 100 shares, and we want to go in and sell a call against it. So, let’s say I sell this one. Okay, analyze. And now it caps, right? So, I buy the 100 shares, and I’m willing to get rid of them at $200. Perfect. So, that’s actually what you want to do.

But now, can you?

Yes, you can sell more than one covered call. The general rule of thumb is that for every 100 shares of stock that you own, you can sell one covered call contract. So, if you have 200 shares of stock, you can sell two covered call contracts, and so on. However, there are some advanced strategies that allow you to sell more than one covered call per 100 shares of stock, but those strategies require a bit more experience and knowledge.

Conclusion

Selling covered calls can be a great way to generate income from your stock holdings while cushioning your losses. If you’re interested in learning more about covered calls, consider checking out tradersfly.com for coaching sessions and courses. And remember, for every 100 shares of stock that you own, you can sell one covered call contract.