How to Trade Covered Call on moomoo
When you hold stocks you believe in, is there a way to earn beyond just waiting for price appreciation?
Today we reveal an advanced investor's secret weapon - The Covered Call strategy!
The core of the Covered Call strategy can be summarized as: holding the underlying stock while selling a call option. Note that the number of shares owned should match the number of call options sold.
Let's break it down with an example.
Imagine you own 100 shares of XYZ, currently at $40, and expect it to rise to $50 after earnings release.
You sell a call option with a $50 strike price, earning $1.5 per share, totaling $150.
This strategy also has two possible outcomes:
① If XYZ hits $50, the option gets exercised, and you sell your shares at $50 each. Plus, you keep the premium, effectively selling at $51.5 per share.
In this situation, your profit consists of two parts: the option premium from selling the call and the profit from the stock sold.
② If XYZ drops to $35, the option expires worthless, you pocket the $150 premium and continue holding your shares.
While the stock price decline causes some loss, the premium income helps offset part of the downside.
To construct a covered call on moomoo is simple：
Since you already hold the stock, just go to Options Chain > Tap on the Strategy tab at the bottom > Select Single Options and directly sell a call option.
The system will automatically recognize and construct a covered call for you.
If you do not currently hold the stock, you can also choose the "Coverde Stock" strategy to enter the trade.
The system will automatically help you buy 100 shares of the stock and sell one call, thus forming a Covered Call.
Don't forget to use the 【P/L Analysis】tool to help you evaluate potential outcomes before making a trade.
Want to learn more about options, feel free to follow the moomoo learn options course. We will continue to bring you more exciting options content!
This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. Read more