Would you like to generate current income from your stock position without selling your securities? If you don't think your stock is likely to appreciate significantly in value, selling call options might be an effective strategy for meeting your immediate desire for income.
Selling call options is a strategy that works well when you believe your stock won't move sharply in value - in either direction.
What a call option won't do is protect you from downside risk.
The seller of a call option gives the buyer the right to purchase a share of stock at a predetermined "strike" price. The seller of the call sacrifices any upside potential beyond the strike price, but benefits by generating current income. The buyer profits from the purchase when the underlying stock's price increases. When the seller owns the underlying stock, the option is called a covered call.
A derivatives-based strategy can help you achieve a variety of investment objectives
Option based strategies can also have many implications in terms of taxation and regulatory issues, for example when insider sales restrictions apply to your holdings. A derivatives specialist from PNC Capital Markets, LLC can work with you to craft a customized strategy that's designed just for you.