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Give Your Dividend Income Some ‘Options’ With Covered Calls

We all could use more income these days, especially with interest rates at historically low levels. For many investors, the hunt for yield has taken them toward some exotic and risky fare. New strategies, security types, funds, and insurance products have grown in popularity since the Federal Reserve began its zero interest rate policies (ZIRPs) during the Great Recession. But one simple, risk-less technique is being ignored by many investors. We’re talking about using options.

We’re referring specifically to selling covered calls on your portfolio of dividend stocks.

While many investors shun options due to their complexity, using covered calls to supplement your income is quite simple and the effects can be pretty dramatic to your bottom line. Moreover, the risk for these option techniques is minimal as well versus other forms of income generation.

In the end, selling covered calls could be what retirees or near retirees need to boost their income profiles.

To learn more about different portfolio management techniques, check out our Portfolio Management channel.

Covered Call Basics

Covered call strategy

Tax Issues

Putting Covered Calls Into Practice

The Bottom Line