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Yahoo! Inc. Message Board

  • goingbravo goingbravo Mar 6, 2009 6:58 PM Flag

    Split29, how do you play covered call!!

    You mentioned it is ok for retirement account, Roth in particular!!!

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    • Have a look at your Roth IRA and make sure you are able to buy and sell options on that account. There is sometimes a paper that has to be signed to allow this.

      Then, have another look at the example I gave you last night and really try to understand the numbers. I'm glad you found it helpful.

      You need to do some reading on how to trade options. It's a bit of new vocabulary, but focus mainly on call options. Covered calls only means you own the underlying stock, which in this case is YHOO.

      It's not terribly complicated, but if you are not careful, you can make a big mistake. A contract is 100 shares and if you mix those up and sell 100 contracts, you are really selling 10,000 shares which could fiscally impact your retirement!

      If you have problems understanding, there are lots of options traders on the board who will be happy to help. Don't trade options until you understand them. Once you have a strategy, you might want to float it on the board and listen to the risks and rewards. It can be a bit intimidating at first but like everything else, you should get familiar with what you are doing before you do it. You might want to try one of those free stock market picking simulations, if they allow option trading.

      Good luck and read first. Have a good weekend.

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