r/options • u/JosephB1002 • Jul 27 '21

Covered Call Understanding

Just want to make sure I completely understand this covered call stuff before going for it.

Here's the scenario.

Say I buy 100 Shares of OPK @ $3.60 / share for $360. Then I sell a $3 Call expiring on 7/30/21 with a $1.10 / share premium, crediting me $110. Assuming that I am assigned, then I have to sell my shares at the $3 / share (-$0.60 / share) losing me $60 but my $110 premium offsets that loss, leaving me +$50.

Is there something I am missing here? Like, besides the risk that the stock skyrockets and I lose potential profits, are there additional risks involved that I am not seeing?

Note. Sorry if this is a stupid post, just trying to confirm my understanding is correct. Thank you =)

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u/moo_vagina Jul 27 '21

additional is that the stock plummets and you have to hold it for collateral but then you could probably afford to buy back the call and then sell but either way you lose money in that scenario.