At the end of the day, I can always get my shares back. In the AAPL example, I now have at least $60,990 sitting in my account. When my shares got called away, I sold them for $600. On one covered call, that's 60 grand. If my cost basis on AAPL was $500, I turned a 22% profit on the trade, which equates to $10,990 in real dollars before transaction costs.

I could put that money to work and buy AAPL back on the spot. I could wait for the inevitable pullback and buy on weakness. Or, even better, I could turn around and sell an AAPL put, which obligates me to purchase AAPL at the strike price of the contract in the event I get assigned. This represents another way to generate income. As with a short call, when you go short a put, you collect the premium on the option as a credit in your account.

You have some control over whether you get assigned. Plus, you can set your strike price on the basis of your sentiment. If you expect a pullback, go for an OTM put. If you expect some strength, go ITM, which will also bring in more income. There are many ways to go about this type of trade.

Later in the week, I will discuss the ins and outs of selecting a strike when you sell a put in an attempt to get long a stock.

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