Covered Calls - Kingdom Capital Training Institute

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Welcome to Kingdom Capital Training Institute, where we write covered calls - that is all we do. We feel this is one of the most conservative, simple and successful approaches to investing money around.

KingdomCapital.com provides comprehensive covered call investment training services and we demonstrate outstanding performance results - "LIVE" on our website. Covered calls are a conservative approach toward generating monthly income from your investments. With our step-by-step instruction you or your investment professional can paper-trade for a few months and see that excellent returns are possible. Then you will be ready to open your own account and get your investments moving toward higher profitability!

Members recieve hands-on training as our Fund Manager guides you step-by-step to actually make these returns. He consistently outperforms the benchmark indexes (see Past and Current Performance Charts) and in a few months you will too!

If you're like us, one of the first questions you may have is: If this is so great why haven't I heard of it and why isn't everyone doing this? Well, let me explain. Most people buy stocks in hopes of selling it when it goes up. This approach can give you good returns, but at a high risk. The whole idea of purchasing stock and selling the option to a third party is never considered, or at best, a small afterthought.

So...how does this all work?

What we do is buy a stock with the specific purpose of selling the option to a third party. They pay us about 10% to hold on to the stock and sell it to them a month later. This is where we make our money. Our money comes from the selling of the option, not the rise and fall of the stock.

This is all we do, over and over and over. This is the equivalent of compounding 10% interest in a bank account every month. In fact, if we started with $1000 ...writing covered calls for one year would grow that initial investment to over $3000! Of course, in the real world everything is not perfect, but we have been able to achieve on average more than 50% per year through these rather tumultuous market conditions.

And this gets even better! On our web site, we have established a live fund - with real money! Look over our shoulder, watch and learn as we train you to evaluate and manage like us in your own account! In fact, this is such a conservative plan that Uncle Sam allows you to use your retirement account to buy stock and sell options, so you may have money already, just waiting to be maximized!

We invite you go to our Services page, so you may get a more in depth explanation of what we do and how we do it...and how you may do it to.

About Covered Calls

Writing covered calls (also referred to as covered options) are an interesting option strategy or "investment vehicle". Just as there is a Stock Market...there is also an Options Market. Most people who have heard of options may have associated them with the "stock options" that many companies grant to employees. While similar, call options written against stock is very similar to free money.

If you own (hence buy) 100 share increments of stock in a company (and it is an "optionable" stock whereby option contracts can be written against it), you can sell (also referred to as "write") for a premium (hence "free money") the right and not the obligation, for the purchaser of the option contract (1 contract = 100 shares) to exercise the right to purchase the stock at a specific stock price on a specific date that the option expires.

While this may seem a mouthful (and it is) you will become very, very familiar with this simple process as we apply it over and over (and over) in our accounts.

Let me go back and clarify a few terms before I give you a typical example. What is an option - and more specifically a call option? It is the right and not the obligation to buy a stock at a certain price on a certain date. We as call option writers do the selling...not the buying! We are going to establish positions (means buy stock) for the specific purpose of then selling these option contracts to get a premium - that is the free money that goes into our account the very next day. The money or premium from the sale of the option contract is ours no matter what! And the call option contract may or may not be exercised on the date of expiration.

Options expire every third Friday of the month. Option contracts are sold with a specific strike price (5, 7.5, 10, 12.5, 15, 20, 25, 30, 35, and so on). For example a May 12.5 option contract expires the third Friday of May and is exercisable, hence the stock is sold at $12.50 a share.

As I've said, WE SELL these option contracts - AND FOR A HEFTY PREMIUM I MIGHT ADD. For example, let's say we go on the Internet and look up INTC (symbol for stock in Intel Corporation) to find it is selling at $14.75 a share. Alternately we look up prices for next month's (June for instance) INTC call option contracts to find a market price of $1.77 for the $15 strike price. That, my friend, is a valuable 12% premium if sold against an investment in the "underlying issue" (INTC stock). Of course we calculate this return by dividing 1.77 by 14.75.

What is a strike price you say? Well in the example above, if on the third Friday of June the stock closing price is equal to or greater than the $15 (strike price), the person you sold the June 15 call option contract WILL exercise it and buy your INTC shares for $15 each. If the stock is less than $15 you keep the stock (since there would be no incentive for the contract to be exercised or bought at $15 a share) - and like we said...NO MATTER WHAT, the option contract premium of $1.77 we got for selling the option is ours for the taking. whether the option contract is was exercised or not.

So, in summary, for each $14.75 share of INTC stock (you buy and own in 100 share increments) a contract was sold for $1.77. So if you buy 500 shares for $7,375 (less broker commissions) and sell the 5 contracts (or 500 shares) of the June 15 call options for $1.77 each - your 12% return would amount to $885 (free money) for a position held for a few weeks!

There are a lot of optionable stocks to choose from and there are number of factors (besides the hefty premium) that determine what makes a worthwhile investment (hence a good "covered call candidate") - not the least of which are the technical and fundamentals of the company stock. We at Kingdom Capital Training Institute will take the mystery out of the simple exercise of writing covered calls (by doing them over and over again in our accounts) and will facilitate in the selection of appropriate covered call candidates so you can easily compound 40+% average annual returns (55+% using "limited margin") in your account year after year.

There are a few other terms you will need to get familiar with as you continue with the Kingdom Capital Training Institute, but take heart in that the above basic concept and terminology that you learn is for the most part most of what you will need to know. Oh, by the way, the term "covered" refers to the fact that in you owning the stock, you are covered if you get called to sell your stock per the option contract requirements, which is said to be "called away". Let Kingdom Capital Training Institute provide you the expertise to successfully manage your accounts and be well on your way to financial freedom!