Hi, I’m Amber Lee Mason, editor of DailyWealth Trader. And today, I’m going to show you, step by step, how to place a covered-call trade through your broker.

Keep in mind that you’ll need to have your brokerage account set up and approved to sell covered calls. More on that later.

Today, we’re going to make this trade using TD Ameritrade. Your broker might look slightly different. But the basic steps will be the same.

Before we get started, please understand, this is just an example. This is NOT a recommended trade.

OK. The first step, of course, is to go to your broker’s website and log in.

Once you’re logged in, click on the Trade tab, then click Options.

Under Options, click on the Covered Call tab. And make sure Buy/Write is selected.

It’s called buy-write because you buy shares of a stock, then sell or write a call option.

Today, we’re going to buy shares of semiconductor giant Intel and sell the January $25 call option.

In the Underlying Symbol box, type INTC the stock symbol for Intel and press View Covered Calls. This shows all of the call options available for Intel.

Under Expiration choose January. The expiration date is the day the contract expires.

And in the Strike box, type in 25. The strike price is the price you agree to accept to sell your shares.

Now click View Chain.

Then click 25 Call. And finally, click Sell.

OK. so far, we’ve told our broker we want to sell the Intel January $25 covered calls.

Now, we need to decide how many shares to buy and how many call option contracts to sell.

In the Quantity box, type the number of shares you’d like to buy. One option contract covers 100 shares. So you should buy in multiples of 100.

Notice that on the next line, under Action, it says Sell to Open. Sell means you’re selling an option rather than buying one. And Open means you’re entering the trade.

In the Number of Contracts box, enter one contract for every hundred shares you’re buying.

Now we’ll tell our broker what price we want before we make the trade.

Under Order Type, choose Net Debit. The net debit is the price you pay to buy shares minus the amount you collect for selling the call. So the price you enter here is the most you’re willing to spend to enter the trade.

We’ll place our net debit price between the To Close and To Open prices. The To Close price is the highest amount traders can receive to close this covered-call trade. And the To Open price is the lowest amount traders can pay to open it.

Putting your price in the middle balances low costs with fast execution.

Under Time-in-Force, select Day. That means if your order isn’t filled today, your broker will cancel it.

Click Review order and double check all the information you entered.

You can see we’re buying 100 shares of Intel. And we’re selling one Intel January $25 call contract.

We’ve set our net debit price. And the trade order is good for the day. And finally, you see our estimated total cost to place the trade, not accounting for the commission.

When you’re satisfied, you can place the order. And you’ll have made a covered-call trade.

It’s as simple as that.

I’m Amber Lee Mason. Thanks for watching. And good trading.

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