Don't Sell Apple, Intel, Chipotle and IBM On Earnings; Do This Instead
As of Tuesday's close, you could write the CMG August $400 call and collect $13.80 in premium. That means $1,380 in your pocket no matter what. That $13.80 also means that you do not leave money on the table, effectively, until CMG trades higher than $413.80. Even at that point, you have not actually lost anything until the counterparty exercises his or her option to buy CMG for $400 a share.
You can use covered calls in a variety of ways, tweaking strike prices and expiration months to suit your sentiment and gain/loss situation. No matter how you go about it, broadly speaking, investors are can be better off making use of covered calls. If you don't, you really leave money -- as close as the market comes to giving you "free" money -- on the table.
At the time of publication, the author was long INTC.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.