Part I: BUILDING THE FOUNDATION.
CHAPTER 1: Option Basics.
What Are Options?
How Options Compare with Stock.
Listed versus Unlisted.
Players and Positions.
Exercise and Assignment.
The Basic Mechanics.
What Happens at Expiration.
Covered versus Naked.
Options in Your Account.
Recapping Option Basics.
CHAPTER 2: Just Beyond the Basics.
Fair, or Theoretical, Value.
Theory versus Reality.
How Options Are Traded.
Recapping Just Beyond the Basics.
CHAPTER 3: Covered Writing Mechanics.
Requirements for "Valid" Covered Writes.
Risk/Reward of a Covered Write.
Risk/Reward Characteristics Over Time.
Shorting a Call versus Shorting a Stock.
More on Exercise and Assignment.
Calculating Potential Returns.
Return if Exercised (RIE).
Return Based on Net Debit.
Part II: EXECUTING THE STRATEGY.
CHAPTER 4: Turning a Position into a Strategy.
A New Way of Thinking.
The Simple Case: Doing Nothing until Expiration.
Closing Part or All of the Position.
Rolling Up and Out.
Covered Call Strategies.
The Total Return, or "Buy-Write," Approach.
The Incremental Approach.
Hedging Individual Stocks.
Reducing Risk in Small Portfolios.
Writing Calls on "Hot" Stocks.
Tax Deferral Strategies.
CHAPTER 5: The Benefits of Covered Writing.
The Rationale Behind Covered Writing.
Call Writing and Stock Returns.
Major Factors Affecting Call Writing Returns.
Covered Writes Compared with Stocks Over Time.
The BuyWrite Index (BXM).
Real-World Results for Twenty Stocks.
Results by Calendar Year.
Effects of Writing a Higher Strike Price.
CHAPTER 6: Intangible Benefits.
What is Long Term, Anyway?
The Covered-Write Solution.
The Benefits in Detail.
CHAPTER 7: Implementation.
Deciding on Your Approach.
Traps Involved in Writing for Incremental Return.
The Total-Return Approach.
Traps in the Total-Return Approach.
Are You a Fundamentalist or a Technician?
Selecting Stock Positions.
Searching All Stocks.
Searching Specifically for Covered Writes.
Selecting Calls to Write.
Which Strike Price?
Which Expiration Month?
Getting Your Ducks in a Row with Your Brokerage.
Full-Service versus Discount Brokers.
Which Account to Use?
Writing Calls on Your Employer's Stock.
Market and Limit Orders.
Using Spread Orders When Rolling.
Basic Tax Rules for Options.
Precepts for Covered Call Writers.
CHAPTER 8: Advanced Implementations.
Covered Writing on Margin.
Margin Rules for Covered Writes.
Advantages of a Margined Covered Write.
Covered Writing against Securities Other than Stock.
Covered Writing on "Diamonds," "Qs," and Other ETFs.
Writing Calls against Convertible Securities.
Writing Calls against Other Options—The "Call-on-Call" Covered Write.
Covered Writing on LEAPS.
Partial Writing, Mixed Writing, and Ratio Writing.
Advantages of Put Writing.
Disadvantages of Put Writing.
Implied Volatility and Overvaluations.
Efficiency, Inefficiency, and Overvaluation.
CHAPTER 9: Tools for Covered Writers.
Industrial Strength Option Software.
What Will This Cost You?
Internet Resources for Covered Call Writers.
Appendix A: Timeline of Options Trading in the United States.
Appendix B: Sample Covered Writing Spreadsheet for Tax Purposes.
Appendix C: Tax Rules for "Qualified" Covered Call Options.
Appendix D: Twenty-Stock Covered Call Study.