Dividend Alternative When Your Stock Does NOT Pay a Dividend Using Options (Covered Call)

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What can you do if your stock does not pay dividend but you still want passive income?

Basically, the whole goal and premise is to make some monthly or quarterly income just by sitting on stocks just like with dividends.

Some people, like the retirees, make monthly income from dividends by scattering the dividend payouts.

However, some stocks just don’t pay dividends.

How can you make some income when a stock doesn’t pay dividends?

So, this comes down to using the power of options to make monthly or quarterly income. If you already own the stock and this is called the covered rights.

Let us go through the strategy and concept to get a better idea. 

Let us take shop as an example which does not pay dividends because they do not just give you money for sitting and waiting so,

The alternative is to sell some calls since each contract controls 100 shares.

Let me explain how this process works.

For example, we are interested in selling a call about 65 days out, and the stock price right now is 307. 

So if you sell one at 310, it’s really close and you will make more money if you sold one, compared to at 320 because the probabilities of hitting 320 is less likely. 

Because I have 200 shares I can sell 2 contracts and what it does is it flattens out my curve. 

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