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Strategy guide

The Ten Minute Trader Strategy

A visual guide to the covered-call approach described in the supplied material. Options carry meaningful risks.

What’s the big idea?

The source guide describes selecting growth stocks and using covered calls to collect option premiums while continuing to own shares. It mentions a stock-picking list from an outside publisher and illustrates monthly income scenarios. These are the source page’s descriptions, not verified results or promises.

Risk reminder: Covered calls do not eliminate downside risk. A stock can fall substantially, premiums may not offset losses, and upside is limited above the call’s strike price. Options may not be suitable for every investor.

Three possible sources of return

Share-price movement

Shares may rise or fall. Gains can be limited by the call’s strike, while losses on the shares can be substantial.

Option premium

Selling a call brings in a premium but creates an obligation to sell shares if assigned.

Dividends

A company may pay dividends, but payments are not guaranteed and eligibility depends on timing and ownership rules.

Illustrative income calculator

This simple estimate applies the selected percentage to the notional share value. It is not an option-pricing model and does not predict actual premiums or returns.

Illustrative monthly amount

$700

Illustrative annual amount

$8,400

How the source guide describes the process

  1. 1

    Review a stock list. The source guide describes reviewing outside stock selections and considering a candidate based on your own research.

  2. 2

    Assess an options position. Understand the share purchase, call strike, expiration, premium, assignment conditions and potential loss before entering a trade.

  3. 3

    Monitor and make an informed decision. Review the position as market conditions change; options can expire, be exercised or be assigned.

  4. 4

    Repeat only if it suits your plan. Reassess risk and suitability each time. Repeating a trade does not ensure a profit.

Possible outcomes

Shares remain below strike

The call may expire or be closed. Premium is retained, but the shares may still lose value.

Share price declines

The premium provides only a limited cushion. Losses may exceed the premium received.

Shares rise above strike

Shares may be called away. The call writer generally gives up gains above the strike price.

Rules to consider before trading options

Before opening a covered call

  • Understand the stock’s downside risk and the call’s assignment terms.
  • Choose a strike price you would be willing to sell the shares for.
  • Check expiration, liquidity, fees, taxes and upcoming company events.
  • Keep position size consistent with your personal risk limits.

Avoid assumptions

  • Premiums are not free money and are not guaranteed income.
  • A premium may be small compared with a sharp fall in share price.
  • Assignment can happen before expiration in some circumstances.
  • Do not assume a stock will rise, stay flat, or pay a dividend.

Worked example: understand the trade-off

Suppose someone buys 100 shares for $100 each and sells a call for a $5-per-share premium. The premium received is $500 before fees and taxes. If the share price falls to $90, the shares have lost $1,000 in market value, so the premium does not prevent a net loss. If the shares rise above the call’s $110 strike, they may be sold at $110, limiting participation in gains above that price. This simplified example omits fees, taxes and other option risks.

Educational material only

This guide is not individualized investment advice, a recommendation or an offer to trade. Options involve risk and are not suitable for all investors. Read the options disclosure document and consult a qualified professional about your situation.

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