Hello,
So I just started learning about covered call options. I have generally very low risk appetite and I am thinking covered calls would be best suited for me.
Let me know if there is any downside here.
I own 1000 shades of MPW at $5 average.
If i sell 1 year expiry covered call with $3.5 premium and strike price of $2.5.
I will immediately collect $3500 premium.
Now, if (MOST likely) the person exercise the call then I will get another $2500 ($2.5 strike price)
So, my total would be $6000 on my initial $5000 book value. So, approx 10% in return (Which i am okay with)
Of stock goes higher up crazy then I'll miss out on the upside and any dividends.
But is there any other downside of this other than that.
Of course if it goes below $2.5 then I'll lose on the stock itself.
But is there anything I'm missing here?