Now that we have given you the steps to write Covered Calls, let's go through an example. The stock you are going to use for this example is MP3.com, Inc. (MPPP).

This example comes from the CallsAndPuts.com "Covered Calls" data. Let's go through the procedures step-by-step:

1) You select MPPP from the "July Covered Calls" listing in the Out-of-the-money section:

2) You didn't select the highest % return Premium, but selected MPPP based on the criteria you've established for a good Covered Call candidate (This differs for each Covered Call writer based on risk versus reward criteria).

3) Let's assume you read the latest news on MPPP and it mentions information about a strategic alliance that may be promising.

4) You access the Stock, Option, BB&RSI links and based on your risk versus reward criteria determine that MPPP is your CC investment choice.

5) Let's also assume that you have an account with ETrade and want to place your order for the stock purchase and CC write or sell option position.

6) Once you log into your account on www.etrade.com, access the Trading > Enter Stock Order link. 

7) Place your stock purchase order for 600 shares by selecting the following fields:

8) This purchase of MPPP is for 600 shares at market price. If your want your purchase to execute at a specific stock price, select the "Limit" radial button and enter the price.  

9) Once your stock order has executed successfully (check your email status), choose the Trading > Enter Option Order link.

10) Place an order to write covered calls for your 600 shares by selecting "Sell Open" and enter 6 Contracts (remember, 1 contract = 100 shares).

11) Select the "Market" radial button if you want the order to execute at any price when it gets to the trading floor or select "Limit" if you want the covered call position to execute at a specific price.

12) When you sell your call options, the CC premium amount will be placed in your account within one business day, and these funds will be available for your use in other investment transactions.

CoveredCalls.com

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