Using Covered Calls for Profitable Dividend Investing

There are ways to grow investments, despite the economic fluctuations in the market. Tried and tested techniques allow you to invest with little to no risk so you can boost your income. Using dividends is one of the options you can look into for investments, allowing you to build your books with profit without the risk that is taken. Understanding how to strategically approach dividend growth investing with covered calls also allows you to approach the market differently.


Using a Buy – Write Option


The first step to take with dividend growth investing is to look at the ability to buy – write. You will want to invest in a premium share that you know is going to gain in value. You can expect this to occur over a period of time, allowing you to watch the percentage share that takes place. When the premium reaches a certain point, you can use dividends and covered calls to change your status. You will be able to buy – write, or collect from the shares that are offered. However, unlike covered calls, if the premium moves to a higher cost, then you may lose a part of your investment. You will have to look at a specific strategy to reduce the risk that is associated with your investment in the stocks.


Building With Put – Selling


Another strategy to investigate is with the use of put – selling. In this particular approach to DGI, you will be able to increase the amount that you have with stocks. You can buy the stocks or shares at any price that you want, specifically allowing you to increase your portfolio. You can then turn the stocks and use the covered calls to sell back the stocks that you have. This will be available at a discount from the current shares on the market, often referred to as Drip. However, you will get paid a dividend income for placing the shares in placement of put – selling. With this particular approach, you may be risking the amount offered from your investment, specifically which increases the risk.


Strategies of Covered Calls


The benefits of DGI come with the invitation to build a passive income with your stock portfolio. You will be able to take the shares that you own, specifically dividing them up to place on the market. You can then look at call options available on the market while selling the shares against the stocks that you currently have. This particular strategy with dividend income provides you with a way to generate income without making any more investments. More important, the call to sell provides you with more income streams from the dividends. For a no risk and high return option, covered calls offer more with the stocks that you have.


Triple your income and begin to profit without the risk that is often associated with stocks. By using covered calls with your dividends, you will be able to triple your earnings without buying more stocks. The covered calls that you take allow you to buy and sell covered calls while creating a higher percentage in net worth with the stock investing that you are looking into. With the various strategies available, you will easily be able to enjoy more by selling covered calls.

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