How to generate passive income using covered calls options trading (stock market strategies)

The end goal of many dividend investors is to generate enough passive income to cover their living expenses.

There are two ways to reach this goal faster: have a larger portfolio or generate a higher portfolio yield.

In today’s video, I’m going to explain how you can generate higher portfolio income by implementing a covered call option strategy. This video talks about:

– What is a covered call options strategy?
– How to select which covered calls to sell
– Covered call example #1: AT&T (T)
– Covered call example #2: Microsoft (MSFT)
– Covered call example #3: Facebook (FB)

To understand what a covered call options strategy is, you need to have a fundamental understanding of stock options. Here’s the formal definition of a stock option.

A stock option is a contract between two parties in which the stock option buyer purchases the right (but not the obligation) to buy/sell 100 shares of an underlying stock at a predetermined price (called wwthe strike price) from/to the option seller within a fixed period of time.

If the contract allows the optionholder to buy the security, it is a call option.

If the contract allows the optionholder to sell the security, it is a put option.

Each stock option corresponds to 100 shares of the associated security, which is called the “underlying.” This is a very important concept to understand, and makes the covered call strategy unsuitable for investors that have only small amounts of capital invested in the stock market.

In a covered call options strategy, you sell a call option for a security that you already own at least 100 shares of. This allows you to receive the option premium upfront in exchange for a capped upside.


If you’re interested in learning more about the covered call options strategy, we encourage you to watch this video and read this comprehensive guide:


If you’re interested in generating rising passive income over time, you may want to explore Sure Dividend’s premium investment research services.

Sure Dividend offers investment research through 3 monthly newsletter publications. You can read more about each of these publications below:

Sure Dividend (dividend growth stocks):

Sure Retirement (high yield stocks):

Sure Dividend International (international dividend stocks):


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