Friday, May 17, 2013

Income Trade

A few days ago I decided to do an income trade.  I purchased 100 shares on Royal Bank (RY) at a cost of 61.26 excluding commissions. I then wrote a covered call with a Jun 21/13 62 call option for an option premium of 69.05 after commissions. This amount gets immediately into my broker account. Using a covered call allows an person to increase there rate of return.

If the price of Royal Bank stock goes above $62.00 the option might be "called away". That means I  am obligated to sell my shares at $62.00, which is the strike price. If the option expires worthless, I will then decide to sell or sell with a covered call.


     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk

No comments:

Post a Comment