I've been trading ES with a spreadbet account for about 16 months and am going to start with an IB account shortly. This also opens up opportunities for extending my investments and i have been looking closely at covered calls. However, this whole options field is totally new to me and there are still some things I'm unclear about.
Is writing covered calls mainly an American thing whereby you buy the underlying stock and then write a call option against it? Is it possible to do this with UK stocks or is a call warrant our UK equivalent?
Everyone I've talked to so far about this is American so I was thinking of trying it out with some US shares on a minimum account size - there's loads of info available for US shares on this. If I understand it correctly, your risk is limited to your holding anyway, but you could lose potential profit if the shares rocket. A number of people seem to be successfully making 3-10% per month regularly doing this, it sounds too good to be true.
Also, would there be any other disadvantages (possibly tax etc) that would be incurred by this sort of trading from the UK?
Thanks
Is writing covered calls mainly an American thing whereby you buy the underlying stock and then write a call option against it? Is it possible to do this with UK stocks or is a call warrant our UK equivalent?
Everyone I've talked to so far about this is American so I was thinking of trying it out with some US shares on a minimum account size - there's loads of info available for US shares on this. If I understand it correctly, your risk is limited to your holding anyway, but you could lose potential profit if the shares rocket. A number of people seem to be successfully making 3-10% per month regularly doing this, it sounds too good to be true.
Also, would there be any other disadvantages (possibly tax etc) that would be incurred by this sort of trading from the UK?
Thanks