Wednesday, September 16, 2015

Cashflow From The Stock Market

      An investor can make in different ways from the stock market.  The most common ways are through dividends and interest.  Dividends are more tax efficient for Canadian investors than interest. Dividends from a foreign country and interest are taxed at the marginal tax rate.

     Is there another way?  Another way that an investor can get cashflow from the stock market is though selling a covered call.  A covered call is when an investor sells an option and is obligated to sell the 100 shares before or at expiration.  As the investor is the seller in this transaction, he or she is paid a premium up front.

      The investor can make money whether the market goes up, down or sideways.  If the market goes down or sideways, the investor gets to keep the premium.  If the price of the stock goes above the strike price, the option can be assigned and the investor will have a bigger gain or smaller loss on the selling of his or her shares.

      Today, I sold a call option in Royal Bank, which I currently own 100 shares.

# of contracts = 1
strike price = $80.00
Premium including commissions = $64.05
Expiration date: Jan 16, 2016

EDIT : the premium was $0.75 per contract
            commission = $10.95

 Disclosure: Long RY

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.


  1. Nice work. I am a big fan of options. I've been successfully using this strategy to stay positive which in a turbulent year like 2015 has been a blessing. Keep up the good work.

    1. Investing Hunting,

      Thanks for dropping by. Options are a great way to receive some extra cashflow from the market. I was actually surprised this order got filled considering how far away the strike price is.