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Understanding LEAPS: Using the Most Effective Options Strategies for Maximum Advantage by Marc Allaire

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CHAPTER 10Covered Writing with LEAPS

The options strategies that are most used by investors are the purchase of call options (bullish) or the purchase of put options (bearish). These strategies are covered in other chapters. The next most popular strategy is the covered write.

The covered write is the writing or sale of a call option against (almost always) 100 shares of stock. These shares could already be owned (as most are) and sitting quietly in your brokerage account. The covered write can also be initiated as a package; that is, one can buy 100 shares of XYZ and simultaneously write a call against that new long stock position. You may have heard of the term buy write; you are buying stock and writing a call against that stock. A buy write ...

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