Option Income (BuyWrite)

Put writing/selling, Covered Calls.

Sometimes called Covered Call or Option Income, a BuyWrite strategy can be expected to outperform the underlying stocks held in three out of four market environments: declining markets, flat markets and modestly rising markets.

Generally, only when stock prices at expiration exceed the sum of option exercise prices and option premiums received would a BuyWrite strategy be expected to under perform the stocks held.

Because both downside risk and upside return potential are reduced, returns on a BuyWrite strategy should be substantially less volatile than the returns of holding the underlying stocks as a stand-alone strategy.