Updated: February 22, 2017
Most investors buy stocks and hope they’ll go up in price. They do nothing in the interim to generate cash flow from those stocks while they sit in their portfolio – like writing covered calls.
I’ll explain. And I’ll also highlight some popular exchange-traded funds (ETFs) and closed-end funds (CEFs) that will help you generate 8% yields or better from this income strategy without actually handling an options contract yourself.
A call option is a contract that gives its buyer the right to purchase a stock from the seller for a certain price within a certain period of time. For that right, the buyer pays the seller a sum upfront, called a premium.
Option traders buy calls hoping they can multiply their money in a short period of time. …