Cash-secured put vs covered call
| Cash-secured put | Covered call | |
|---|---|---|
| You start with | Cash | 100 shares |
| You get paid | Now | Now |
| If the stock stays put | You keep the premium | You keep the premium and the shares |
| If the stock falls a lot | You buy 100 shares at the strike | You still own the shares and the fall |
| If the stock rises a lot | You keep the premium, miss the rise | Your shares are sold at the strike, you miss the rest |
| Good for | Buying a stock you want, at a lower price | Earning on shares you already hold |
Many people do both in turn: sell a put, get the shares, then sell calls on them.
Try both on any stock, on real past prices, in our Lab.
DipBell is a publication, the same for every reader. It is not advice on your own account.
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