Writing a Call Option to SELL Shares That You Own
     
  Share description      
  Share Symbol      
  Current Share price      
         
  Share Commission      
  Option Commission      
         
  Federal Ordinary Income Tax rate      
  State and Local Income tax Rates      
     
Writing a Call Option to SELL shares
         
    Option Sale Proceeds  
  Call Description   Premium Taxes Realized  
  Call Symbol    
  Premium on Call    
  Strike Price of Call   Share Sale Proceeds (pre tax)  
  Out of the money   At Market On Exercise Premium  
     
       
                 
 
  This assumes that the investor owns the shares and has made the decision to sell them as a result of the fact that they have  
  appreciated significantly and portfolio rebalancing calls for them to sell to get back into balance, in anticipation of an eventual market turn.  
 
  For these sorts of investors, this strategy has the risk that the market may turn before the option strike price is reached.  
  A market order to sell would be better if such a risk is deemed significant.  
 
  This strategy is known as selling "Covered" calls. The sale of the call option is "covered" because the investor owns the shares that will  
  be called away if the share price reaches the option's strike price.  
 
  Investors should engage in this strategy only if:  
   1. They own enough shares to cover the call(s) they have sold  
   2. They are prepared to have those shares called away from them.  
 
  If the call writer does not own the shares, it is known as writing a "Naked" call and this is not at all advisable for long-term investors.  

Powered By SpreadsheetConverter