Covered Call Option Strategy Explained For Beginners

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Covered Call Option Strategy Explained for Beginners
This is how to use call options to create passive income in the stock market by utilizing covered calls. This is your call options explained video.
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We hope you enjoy this video about call options and covered calls.
Please check out our other videos about investing in stocks for beginners and how to invest in stocks. We're making these videos so that you hopefully avoid investing mistakes that beginners are prone to making. We will also be doing stock market news talking about stocks, the stock market, gold, oil, bitcoin, and the economy.
ClearValue Tax and affiliates and related parties do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Legal Disclosure: I’m not a financial advisor. The information contained in this video is for entertainment purposes only. Before investing, please consult a licensed professional. Any stock purchases I show on video should not be considered “investment recommendations”. I shall not be held liable for any losses you may incur for investing and trading in the stock market in attempt to mirror what I do. Unless investments are FDIC insured, they may decline in value and/or disappear entirely. Please be careful!

[@clearvaluetax9382]

Our Free Stock Options Videos: Options For Beginners (The Complete Guide): kzbin.info/www/bejne/hIiUq5yLec91bdk Call Options Explained: kzbin.info/www/bejne/oXSVaYCrhrWsq5o Put Options Explained: kzbin.info/www/bejne/qp3GdIOOadlsr5I Covered Calls Explained: kzbin.info/www/bejne/ema1m6uVbL16aLc Cash-Secured Puts Explained: kzbin.info/www/bejne/j5emaHePp85nmdE Free Beginners Guide to Stock Options on our Website: clearvalueinvesting.com/education/options-and-trading/ GET up to 14 FREE STOCKS when you open up a stock account here: a.webull.com/i/ClearValueTax

[@neutralcommentor3742]

Really bad focus. Please remove cinematic mode

[@shirleysaidsew1969]

Saw the title and automatically screamed "YOU'RE THE MAN!" I see people doing this and have no idea what they are talking about but I will like to learn.

[@Mac-ih7rb]

Same! I see calls puts dates cents they might as well be speaking French.

[@StockInvestmentAnalysis]

Just be careful. A lot of people start betting/gambling with these and lose money.

[@ryderwashington4199]

@@StockInvestmentAnalysis I mean with a covered call, technically speaking you really can't lose any money. Like his example, even if stock went down to 90 by the 30th day. Are you going to sell at a loss? Absolutely not, so you still have the premium gain, you just have to wait it out until stock climbs back up. And I think people overlook that neat little aspect... I mean covered call on Google, even if price went below strike. Nobody is thinking google is going bankrupt, it's over. lol

[@waltpro1945]

"I'm gonna be speaking to you as is you know nothing about call options or covered calls." That's perfect, because that's literally me. The only thing I know about them is from preliminarily reading the comments is that you can get severely burned by them if you aren't careful.

[@RandyLy]

If anyone is interested, the method that he's performing is known as "the wheel". It's basically "Selling a Put" with cash that you have and collecting the premium. And if you get assigned, you now own the underlying stock. Then what you do with those stocks is "Sell the covered Call". You collect the premium using the method Brian explained and hopefully, you set the call option at a strike price HIGHER than for how much you bought it for. It's basically a win-win situation assuming the stock continues to go up and if you had sold it for higher than when you bought it for. Thank you for the explanation, Brian! I just discovered this recently and am glad you made a video about it just to confirm what I learned.

[@rtacher]

This is what I do with my stocks. I invest in the actual stock and then sell covered calls on them every week to two weeks. It is great passive income. I use the proceeds to buy more shares and do more coveted calls. I have doubled my money doing this:). It is very safe and a good way to make money!! Very well explained!

[@MarkDanger777]

Even when its volatile?

[@bigbigdog]

How long did it take you to double your money?

[@AQTuanTran-ne8oq]

great ideas do you do it with high price stocks or low price stocks?

[@MoneyJourneyWithSonny]

On another note regards to Stock Options, you can only trade options in group of 100 shares. Each option is controlling 100 shares of stock, in regards to the video above if a stock cost $100 a share. You would have to have 100 shares of the stock for 1 option trade. So, you would have to have 10k dollars worth of stock and if you received $2 for each share it'll be $200 for 1 option. Which is 2% return for a 10k investment for one month. If you done this every month at the end of 12 months you'll have $2,400 or 24% return if the stock never gets assigned. You would of doubled the S&P for a one year period. Remember investing in the stock market you can make or lose money, always paper trade before using real money. Another Great Video!

[@memyself4431]

Hi, so if you invested your money in a high yield saving say about 26k wouldn’t you be making more in interest a month! Wouldn’t it be about 80 a month and you would risk losing your money wouldn’t that be better?

[@paulfox9694]

@@memyself4431 No. you are not going to make 200$ a month on 10,000 in a high yield savings account. You won't make that on 26k.

[@StockInvestmentAnalysis]

Really well explained. You do a great job of simplifying this, breaking it down, and explaining the pros and cons from both sides. To all of the new investors, keep in mind that for many people this is going to turn into nothing more than betting. Don't make bets with your money. Focus on investing instead of gambling!

[@BigSQL]

Out of all the “covered calls 101” videos…this is the best one.

[@SteveRam]

Me This week: We’re getting fancy! Watch out Webull, here I come! Me next week: lost all my money; please provide a stimulus check update, kinda need it, lol

[@clearvaluetax9382]

LOL Steve. And thanks for that Coca Cola video, I enjoyed it hahahahaha

[@shesoonstar90]

🤦🏾‍♀️😂

[@xeno9756]

I started learning about options literally this week. You've been a great help!

[@michelled4388]

Please remember me. When I get my inheritance, your going to be my first call and I'm going to listen with both ears. Your a good human being and I'm confident your the guy for me.

[@davidliang913]

Remember. The ones that got rich during the gold rush were the ones selling the shovels. Great stuff.

[@snowballisg]

Nahh

[@wintagestudios]

yeah because even selling a million shovels equates to a ton of gold... logic

[@clearvaluetax9382]

What a deep and true statement David.

[@snowballisg]

@@wintagestudios they all got rich?

[@TonyRaimondo-lp6eh]

Thanks!

[@clearvaluetax9382]

Thank you for that super thanks Tony!

[@TwiLightVids]

Speaking to me as if I no nothing about call options, which I didnt! Thanks!

[@AlbertGReene-p8w]

Like Warren Buffet said, dividends are only good if the business you’re investing into can’t make good use of that capital. So if you’re trying to invest into businesses with actual growth, looking at dividends is a waste of time. Why are you investing into a company if they’re returning capital to you because they think you can make better use if it than they can. It’s not much different from bond investing. The way I see it if you have a $1 million at some point, that’d be enough to create a portfolio that would pay you between 50k-70k in dividend income...

[@devereauxjnr]

It's not difficult, but you have to learn and handle. Another thing is that if you can't manage your home, maybe you shouldn't invest on your own. If so, you should hire a CFP to help you diversify your assets to include ETFs/index funds/mutual funds and stocks of companies with consistent cash flows, rather than betting on penny stocks.

[@Harperrr.99]

@@devereauxjnr true, A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. $850k so far.

[@Harperrr.99]

@@OttoLane-j9z I really don't like making such recommendations, because everybody's situation is unique. But there are many freelance wealth managers you could check out. I have been working with "NICOLE DESIREE SIMON" for about four years now, and she's really, really good. If she meets your discretion, then you could go ahead with her. I endorse her.

[@jasontell7481]

@@devereauxjnrwhy would I hire someone that can’t manage their own house

[@oSnapMillerTime]

Dividend stocks in a Roth reinvested into the same company is not bad. Dividends are for people looking for income they aren't for growing wealth unless you stick them in a Roth when you're young.

[@oyamsbabe4028]

You are the first person who explained this in a way I could understand. I now fully understand it. The other thing is that mu understanding is that the option contract must be 100 stocks?

[@KBCrochets]

Correct, 1 contract equals 100 shares.

[@msmforever100]

THANK YOU SO MUCH!!! The way you break down concepts that use to seem too complicated grasp is AMAZING!!! So glad I found you!!

[@jcole3450]

Ive been studying options for awhile. Never really "hoped over that understanding silver line". You simplified it for me and made everything "click". THANK YOU BRIAN!

[@RolandIbera]

Thank you for breaking this information into very understandable language. I have conversed with several retirees who use covered call ETFs to supplement their social security benefits and also have an annuity for life time payments. When they discuss covered calls I get very confused. Great educational video for us uneducated people.

[@eminalopatyuk6812]

That is the best explanation possible. Bingo! Thank you and safe trades.

[@ThinkMoneyBenny]

Options make my heart race! 😲 you can either have a very bad day or have a very good day when playing options 🤑

[@clearvaluetax9382]

Naked options is gambling. This is really a boring way to make consistent $$$

[@pfa2075]

That's the most simple and intelligible explanation of options I have ever seen

[@michaelhall2822]

I watched this like 8 time back to back to finally get it . I'm grateful thank you

[@clintfalk]

Great explanation, but too many people who made comments below didn't bother to actually watch it, or at least couldn't digest it.

[@unequallytwisted]

Now this is what I'm talking about!

[@clearvaluetax9382]

Hi Mike! I hope this video is helpful!

[@stjepanhauser7595]

I came here to learn how to trade after listening to a guy on radio talk about the importance of investing and how he made $460,000 in 4 months from $160k. Somehow this video has helped shed light on some things, but I'm confused about the current market volatility, I'm a newbie and I'm open to ideas.

[@mathebulamkhize876]

Investing in stocks is a good idea, a good trading system would puts you through many days of success

[@quokkapirquish6825]

90% of traders lose money! Be careful, don’t chase your losses and it’s a lot easier in a bull market, wait for inflation to get to 2% - the feel good factor will return. It was easy to double or treble your money after a massive crash like the covid crash. Just as many people lost money in the crash though

[@jacobbuettner8463]

You should do a video expanding on this and tying it into the wheel strategy. Specifically, I wanna know WHEN we should be selling covered calls and cash secured puts if we're using the wheel. The strategy is great, timing option assignments is tough right now Thanks, love the channel!

[@ScottiMac0007]

This is so timely, I've been thinking about covered calls for weeks and just wrote my first on this last Friday!

[@mp0391]

@ClearValueTax I appreciate this video Brian and would encourage more of the same. Very precise and easy to understand. Thank You. I can not say I know nothing about calls. In 1980-81 I taught classes to an incarcerated society (kind of a captive audience if you know what I mean) on Building Wealth Through Stock Market Investing and covered both Options and Futures. As a group we kept daily records on as many as 80-100 stocks through a typical class of 12 weeks. Since then I have been investing since 1983, however I have never traded Options nor Futures myself which is why I enjoyed the video. I've watched the video twice and it is informative and very easy to follow. But, if I might help with a suggestion, you could point out that trading options are only allowed in round lots. Remember your audience is just starting and even if they have the $500 portfolio they only have 1 share 2 companies. And, they might not even know what a round lot is! Just a suggestion, take it as you will. When's the next video for this series? You covered the intention of it but if I'm on Robinhood or TD how would I go about it? And, how did you come up with the $2? I subscribed to your newsletter but haven't heard anything yet. Guess I'll just sit here and wait.

[@chopstix3]

In the middle of watching it but needed to comment before I forget. This is an awesome educational video. Low vix, sell calls for premiums 👍

[@chasingviolet6330]

Thank you. Love the simplicity of the whiteboard. Very easy to understand!

[@arankalanticic1948]

thank you you are the first to explain it to understand - except that if i am right it is not 2.00 that you are referring to your monthly gain but $200.oo as the options strategy is sold by 100 x 2 = $200.00

[@ling199508]

Thank you!!!! Another great video from you.

[@bethalpert5999]

I am loving this education. I saw the thumbnail with the whiteboard and thought uh-oh...breakin out the whiteboard now what is Brian gonna teach me tonight??? Just love it all. And loving that I understand what is being taught.

[@michaeldavis0721]

Get video!! From your example in addition to having 100 shares to write your contract, I always tell my students to have 10 to 20 shares on the side that way you can ride that stock up from $100 to $120 without missing out!!!!

[@ricardocolon6939]

THANK YOU!!! I finally understood this option call business. Love your videos.

[@MisterWaverlyPresents]

Great explanation! Thank you!

[@theropemonster]

Great content. Much appreciated

[@MrKaradayi73]

The best optinos video i have seen 🎉🎉

[@VaddyFC]

Very informative video, I first started out trading options buying puts in March 2020 which turned out to be great as the market came down a lot. I was always stuck on the sidelines playing it safe, only buying stocks. It's good to have a portfolio for long term investing, but option trading can make you money right away if you learn how to do it correctly.

[@salvadorgonzalez6331]

Man you are a beast. I understood 100% of everything you explained. Wow. Thank you!

[@gimpfoot]

Finally someone who explains everything perfectly thank you 🙏

[@madbowler6]

outstanding. best explanation of call options I've seen.

[@michaelangelos5117]

Thanks a lot. I've been trying to figure this out for a while. That explains it very well. Love your channel.

[@teresab208]

I've been doing covered calls and loving it.

[@paulorr9262]

I really love these videos even though this one wasn't perfectly scripted It's so interesting to watch and learn thank you very very much

[@VideogameFrames]

I’ve been using Robinhood for small dividends for a year and haven’t touched options because I didn’t know where to start, thanks so much for this

[@StockInvestmentAnalysis]

Dividends are a great way to earn passive income. For most people, options turns into a lot of gambling and many people lose money that way.

[@alexanderreyes4001]

He has to be the best stock talk person to explaining things about investing love this guy

[@ams3344]

I just started following this guy. He's brilliant. I have a trading background but it's been a minute haha Will you or have you shown how to trade crypto or Bitcoin? I'm SO CONFUSED BUT SERIOUSLY INTERESTED Thank you for taking your time to help others 👏🏻👏🏻

[@socawarrior1263]

i like the emotion expressed in the video, like the sighs before a bad situation

[@Parthmehta63]

I've been, with no success been able to explain to my friends about the rewards of selling puts. Please make that video if you haven't already

[@lennyd1313]

Thank u for going s l ow.... appreciate your efforts sir.. This was the BEST description but the only thing u did not say..... Who cares if u lost the stock u made $7.00 go and re buy it😊😊😊😊😊😊😊😊😊😊😊 Thanks again i am subscribed and liked!

[@FidelCashflow13]

Thanks Brian from CVT ,I'm out of work because my unsafe work environment told me to come back or I lose my job and I chose the latter. I need things like this to help me through these rocky times.

[@sebmcc]

This was helpful, the only video I've seen that I actually understand. 👌

[@forthrightnight]

Thanks. I've had a hard time understanding covered calls. Not any more!

[@kainatbaloch2358]

This is the only video that helped me understand. 👍

[@DemetriPanici]

Yes! I Needed something outside stimulus check content in my life! Great video!

[@clearvaluetax9382]

LOL I'm glad you enjoyed Demetri!

[@AnotherBluntPlease]

So when your in the green and up on a option should you sell it early or exercise it???

[@KBCrochets]

It’s your choice to take profits or let it expire or risk it going in the red

[@rawfreshoner]

That was a great explanation of both sides of the transaction.

[@kingiburu2778]

Making something is better than nothing. Thanks for the wisdom.

[@im_carter4]

You have truly helped me out so much ! Thank you so much! May God bless you !

[@kahratka]

Thanks. That was new info for me.

[@modenim]

That was the simplest explanation I've seen yet. You're awesome.

[@quokkapirquish6825]

Excellent description, I understand it entirely now, thank you so much

[@drpill1230]

I am a swing trader buying naked call options for 1 or 2 years until expiration When the stock market goes up rapidly one day I sell my calls for a 20-50% profit of the call option bought I usually hold my calls for 1 month then sell then buy the dip a week later do it again

[@jesushernandez-eo8fq]

Call options for dummies... well explained 👍

[@surajbhatta2418]

Great explanation!

[@supawizkalifia9711]

This is hands down the best video I've seen so far. Thank you Brian!

[@klloyd4395]

Thanks! Great info. Been checking out a lot of your videos recently. Very helpful. 😀👍

[@fynnsfx5510]

Cheers to this guy for the amazing explanation!

[@handymancam5787]

I watched this video years ago and have been selling covered calls ever since. Lately I’ve been seeing stuff on the wheel strategy. I’d love to hear you opinion on it and see how you explain it.

[@fnusugiharto6832]

Amazing explanation… I love the way you show it to us … but I still have a few questions: 1. It show in Robinhood app example: NVDA price right now is $144.25 and I click trade option and I choose Dec 27 $150 for $3.75 it show “Sell” after that I cannot find any “buy” button? And if I choose $150 meaning is that the price they will execute when the stock price is up to $151 or at breakeven price $153.78 ? Thank you

[@joevinyltube]

Great tutorial! Thanks ClearValue Tax for always looking out for us! Really appreciate your channel!!

[@cluedin]

thank you for doing this, very clear for beginners

[@bobchant1529]

That’s so awesome that you guys are showing your long term short term investments, it’s genius, and This is how we can grow together. I’m not going to say it but you know what I mean motley.

[@jewelmcneil4392]

Thanks so much! Starting tomorriw I get pen and paper start with the first investment video. Awesome teacher, this is what I have needing.

[@cucubee444]

Gaining wisdom with numbers thanks to Brian!!!! 🎉🎊🙌✨🌟💫🎊💫🎉🙌🌟✨🙌🎊💫✨😌

[@clearvaluetax9382]

That is so awesome to hear Cucu Bee Cucu Bee! Thank you for sharing that, it means a lot to me! And thank you for all those emojis!

[@cucubee444]

ClearValue Tax 📣📣Brian can you hear me???? You are most welcomed!!!!!!📣📣📣📣📣📣📣📣📣📣📣📣📣📣📣📣📣📣

[@clearvaluetax6878]

@@cucubee444 make sure you invest

[@clearvaluetax6878]

@@cucubee444 invest $500 and get $5k

[@clearvaluetax6878]

@@cucubee444 bill_biker20 on IG

[@petersison7804]

Thanks for your knowledge you absolutely RULE.

[@clearvaluetax9382]

Thank you Peter!

[@chrism2383]

Excellent ,simplistic explanation. That clarified a often misunderstood strategy.

[@particles1101]

Thank you for explaining it in plain English.

[@MrJohnluvit]

This guy is great , learning so much

[@mlmarsico]

I really appreciate this! I'm finally understanding!

[@veravera1325]

Amazing job. Thanks for simplifying. Extremely informative for us.

[@pantherXeroara]

Dude you made this so easy to understand! Thank you!

[@ChildOfAsura]

I love all your vid bro. Only thing I would mention to beginners is a call or put option is that each option is 100 Shares worth being bought or shorted should be noted.

[@MrHardbodykarate]

really helpful, thanks

[@beatlessteve1010]

The first thing I thought of when you explained call optioning..is why would I buy the stock for 105 when it sells for 100..but you did sort of explain that.I do understand the general concept of purchasing an option to buy for 2 $ within a set amount of time howerver....I am about as amateur as you can get about investing in the market so excuse me if my comment seems dumb.Wow.a.very creative way to make money all in all though.

[@robertogarcia3488]

Thank you, Brian, for the explanation, good Job man the is the way to teach !!!!!

[@JaronPope]

Helps a lot brother! Thank you!

[@arthursaavedra3531]

Finally someone explains it where I can understand

[@Boldbro]

Yep, I get that, pretty clear cut: Of course I will have to replay it over again till it sinks in, but fundamentally I understand. Thx !

[@TheCryptoMiner]

I love you clear value tax!!

[@j.tradeforexinc.2819]

Hey Brian!! This is cool. Keep teach the masses bro! Much respect. I started trading options in 2006. This is way cool 😎. Keep up the good work!

[@clearvaluetax9382]

Thank you J. Trade Forex, Inc.! 2006 nice!!! They've made options trading easier and easier these days. Must have been a different story back 14 years ago.

[@j.tradeforexinc.2819]

@@clearvaluetax9382 to be honest making money back then to me was much easier. But that's just me I've moved on to Forex. 5 trillion traded daily... 😎😎💵💵💵💵💵💵💵💵💵💵💵💵💵

[@ernesto1149]

Great video men, thanks 🤟🏽

[@Jbranthony]

Thank you so much! I finally understood!

[@Akeeg4]

I sold my first covered calls this week. WFC and APLE. Looks like they are going to expire without hitting the strike price. Extra $12 in my pocket! Very interested in making extra income off this strategy of selling calls and puts

[@steveno7058]

Picking up pennies in front of a steamroller...,

[@MA-lq6eb]

EXCELLENT EXPLANATION👍 PEASE DO MORE VIDS LIKE THIS EXPLAINING...OPTIONS, CALLS, PUTS, MARRIED CALLS/PUTS, LIMIT ORDERS, SAFELY SHORT TRADING, NAKED SHORTS & NAKED LADIES👀...ETC...LOL.😅

[@testpattern701]

This is a great video explaining covered calls to beginners. You go slowly enough that viewers can absorb this complicated strategy. I'm going to have two of my friends watch it.

[@journeytobetterjes_erazo87]

This was so helpful!

[@999thenewman]

An options contract is a legal purchase agreement of shares that can gouge either way depending on market price fluctuation in a 30-day period and the premium owed the optioner. Got it.