"Grammar errors"?
Posted: Tue Mar 22, 2011 1:07 pm
Hello, I am a beginning writer for this company, and submitted my first article which was promptly rejected. The reason given was that you do not accept articles with grammar errors; however, nothing was marked on the article itself. I have reviewed it, and do not find any grammar errors. I am attaching it herein. Can someone please give me some guidance about what you mean by "grammar" errors?
Selling covered calls is a technique whereby the owner of stock agrees to sell his or her stock for a specific price, known as the strike price, by a certain date, known as the expiration date. Options are written as contracts, where each contract controls 100 shares.
A call option grants the right, but not the obligation, to buy a stock at a specific price. If one buys a call option, one buys that contractual right; conversely, if one sells a call option, one sells such right.
This is how the technique works. You have 100 shares of XYZ that you bought at $21.00. You can generate some income from owning that stock by selling covered calls on it. The word "covered" refers to the fact that the option is covered (protected) by the underlying stock. You search the option tables for XYZ and see that the April 2011 $21 call fetches a premium of $.60. That means that you receive $60.00 in your account immediately for selling someone the right to buy XYZ from you at $21. Your break-even cost for the stock is now $20.40, reduced by the premium of $.60 per share that you received for the call option.
At expiration in April, if XYZ is above $21, it will be called away from you (you will sell it) and will have profited by $60.00. If XYZ is below that price, the stock will remain in your account, and you can go out to a future month and sell more covered calls. The covered call you sold for April 2011 has expired, and you are released from any further obligation.
There are several variations on this theme, all of which have advantages and disadvantages, depending on one's sentiment and the vagaries of the market. But covered calls remain a very safe and potentially rewarding source of income.
Selling covered calls is a technique whereby the owner of stock agrees to sell his or her stock for a specific price, known as the strike price, by a certain date, known as the expiration date. Options are written as contracts, where each contract controls 100 shares.
A call option grants the right, but not the obligation, to buy a stock at a specific price. If one buys a call option, one buys that contractual right; conversely, if one sells a call option, one sells such right.
This is how the technique works. You have 100 shares of XYZ that you bought at $21.00. You can generate some income from owning that stock by selling covered calls on it. The word "covered" refers to the fact that the option is covered (protected) by the underlying stock. You search the option tables for XYZ and see that the April 2011 $21 call fetches a premium of $.60. That means that you receive $60.00 in your account immediately for selling someone the right to buy XYZ from you at $21. Your break-even cost for the stock is now $20.40, reduced by the premium of $.60 per share that you received for the call option.
At expiration in April, if XYZ is above $21, it will be called away from you (you will sell it) and will have profited by $60.00. If XYZ is below that price, the stock will remain in your account, and you can go out to a future month and sell more covered calls. The covered call you sold for April 2011 has expired, and you are released from any further obligation.
There are several variations on this theme, all of which have advantages and disadvantages, depending on one's sentiment and the vagaries of the market. But covered calls remain a very safe and potentially rewarding source of income.