Replies to post #41287 on Options Wonderland

[3xBuBu]

if you own a stock and u expect
the stock will go down or trade sideway in a near future, u can sell (write) a call for the underlying stock, which mean u are selling the rights for someone to buy a stock at a strike price within a certain period (or equivalent to buy a PUT), in this case u are a seller instead of a buyer; this strategy is called "Covered CALL".
If the stock price drops, you can buy back the options at a cheaper price or you can wait until the options expires and becomes worthless, in this case u keep all the premium you received.
There is a catch, if the stock keep going up, u need to pay more to get back the rights or u have to hand over your stocks at the strike price at OE date.

[leemalone2k3]

Yes,
Synthetically it is the same strategy.

CC protects your investment in a stock you own now and Naked Puts allow you to buy stock you want at a discount, or lets you collect premium if the stock closes above the price you sold..