Covered Call Tables
This covered calls table ranks over 30 covered call trades by their call option yields. The table is updated daily, and the yields are all annualized yields, for ease of comparison, since these trades have varying time periods.
Why sell covered calls?
1. Higher Yield & Lower Risk - By selling a covered call option, you'll receive the option premium $, which will lower your breakeven cost. The call option premium often pays you much more than quarterly dividends, which increases your yield, especially when you sell further out in time, due to option time value.
2. Cash Flow - You get paid the put option premium now, vs. waiting for quarterly dividends.
3. Tax Deferral - If you maintain your open covered call position until the next calendar year, you won't be liable for taxes on it until the year after. Ex.) In Jan. 2014, you sell a Jan. 2015 covered call, and hold it open until its Jan. 2015 expiration. Since it expires in 2015, you won't have to pay taxes on it until April 2016, so you get the use of the call premium $ for over 2 years, before paying taxes on it.
For call options definitions, please see our Options & Investing Glossary.