As I've become more experienced at trading stocks over the past year, I decided to dip my toes a bit in options trading. Specifically I want to sell Covered Calls. Before I make some stupid mistake, I want to clarify my understanding so far. For simple math: If I own 50,000 shares of a stock that I bought for $1 and are currently valued at $1, and sell $2 covered calls that expire at the end of the month, I first receive my premium based on the price of the contract and number of shares I'm putting up. If by the end of the month the stock does not reach $2, the contract expires and I keep my premium and all my shares? If it reaches $2, I have to sell the shares at that price? It seems too simple so I feel like I'm missing an important detail that could cost me in the end. I appreciate any insight. Thanks!
Yes, thats essentially correct. Best thing to do is just try a small trade to begin, sell a small CC position, see how it goes.
