Options Education

OIC120C: Covered Calls

Course Objective:

The objective of the course is to define what a covered call is and the advantages and disadvantages, the benefits of the strategy and when to use a covered call. The learner will gain an understanding of time decay, how volatility affects a covered call position, provides the different risk vs. reward relationships of aggressive covered calls and defensive covered call positions.

Who Should Take This Course:

Fundamental and Intermediate Students

  • View Course

Course Description:

"Covered Calls" introduces one of the simplest, yet most widely used, option strategies - the covered call. The class chapters cover the strategies, alternatives, and potential outcomes of entering into this option strategy. At the completion of the chapters and prior to the final quiz, you should understand what a covered call is, the risks, the benefits, and when an investor would choose to enter into this type of position.

Course Chapters

Chapter 1 - Introduction

Defines what a covered call is and what the advantages and disadvantages of this strategy are.

Chapter 2 - Strategy Overview

In this chapter the benefits of the strategy and when to use a covered call are explained. Profit / loss and break-even point calculations are illustrated. This chapter also explains how time decay and changes in volatility effect a covered call position.

Chapter 3 - Strategy Specifics

This chapter is extremely comprehensive in giving a specific real life example of a covered call position and then dissecting each possible outcome, including the calculation of profit / loss and return on investment. This chapter also discusses the ramifications of dividend dates and why they must be taken into account.

Chapter 4 - Alternatives

Introduces the student to the alternatives a covered call writer has in relation to different stock outcomes and differing timeframes until expiration.

Chapter 5 - Speculative vs. Defensive

For this chapter, the student will be exposed to the different risk vs. reward relationships of aggressive covered calls and defensive covered call positions. This chapter explains the differences between in-the-money, at-the-money, and out-of-the-money covered calls.

Chapter 6 - Conclusion

The final chapter ties together all the material from the previous chapters. This chapter brushes over the benefits, disadvantages, and uses of a covered call position.

Chapter 7 - Review and Quiz

Review of what you have learned and final quiz.

Course Resources:

Podcasts

OIC121P: Terminology & Mechanics

OIC122P: Covered Calls

Webcasts

OIC101W: The Options Basics Webcast

Talk to Options Professionals

Questions about anything options-related?
Call or chat with an options
professional now.

Call 1-888-OPTIONS
Speak to an Options Professional!
Chat with Options Professionals

Questions about anything options-related?
Chat with an options professional now.

Start Live Chat
Email Options Professionals

Questions about anything options-related?
Email an options professional now.

options@theocc.com

Viewing Requirements