As an investor, owning the stock gives traders lots of options.  No pun intended.  As an option trader I can use the fact I own stock to generate a little more upside.  There are a lot of ways to do it.

You just need to know how to trade it so here we go.

One by two call spreads covered by stock can work great

A covered 1 x 2 call spread is owning 1 contract near the money and selling 2 contracts out of the money.  For my CBOE trade in OPMentoring i owned 1 CBOE Apr05 182.5 call and was short 2 CBOE Apr05 185 calls for .02 debit.  Since I owned 100 shares, the extra short call was covered by the stock.  This is known as a covered ratio call spread.

The break even on the trade was $185 which would have gotten me out for a small profit on the stock + the $2.50 on the 182.5/185 call spread.  This doubles my potential profit but I give away profits on the upside above $185.  With 1 week to expiration that was a bet I was willing to make since the stock going up is a no lose.

What I did do was close the 185 calls for .15 when they went to nothing.  When CBOE made the run I offered the 182.5 calls out at $1.50 and they got taken.  My .05 went to $1.20.  I am doing the same trade for Apr12 except with the 185/187.5 for a .05 credit.  Maybe I get another pop for dough!  

There are lots of ways to generate extra dollars on an upside move.  That is something I teach in OPMentroing.  Learn to use options to your advantage as an investor and better returns for less risk are on your horizon.

Don’t forget there are a few spots for our Summer Outing in Chicago.  Meet the team, make some trades and pay for the trip while getting the best option education out there.