Using Options to Generate Income in a High Yield Portfolio

I regularly track a High Yield Dividend Champion portfolio. This month's update includes a purchase of MGE Energy (MGEE) and Sysco (SYY). Investors interested in generating income or hedging against a neutral can also use a variety of option strategies to enhance this, or any, portfolio. Probably the most common option strategy is the covered call. This strategy entails writing (selling) a call option while at the same time owning an equivalent number of shares in the underlying stock. An investor who sells a covered call is selling the right to purchase shares in the underlying stock at a set price before a set date ("expiration date"). The investor selling the covered call increases his or her income by selling this right to another investor. Selling covered calls is not without risk. There are two primary risks, the first is that shares in your stock are called away from you... Read more