Resource Spotlight: OptionsPlay®

A disciplined covered call program has potential benefits for your clients’ portfolios and for you. Financial software firm OptionsPlay® says help is available:

If you’re an advisor seeking income for your clients’ portfolios, you may be attracted by the potential benefits of a covered call program. Introducing such a program can help you differentiate your practice and has the potential to provide income above existing returns. A covered call program can also help add stability to portfolios. Stocks go up, down and sideways for many reasons, and covered calls can help diminish the volatility of big swings and have potential benefits for portfolios in sideways markets as well.

Some advisors may be reluctant to pursue covered calls because of the challenges of managing a disciplined program, including:

  • Selecting the right stocks and covered calls to use
  • Identifying the appropriate time to take profit, roll or cut losses
  • Knowing what to do if the stock goes up, down or stays the same

Fortunately, there are automated tools available to help advisors and their clients make informed choices, whether positions are legacy, concentrated, buy & hold or actively traded. These tools can help advisors identify the optimal risk tolerance for clients as well as specific income opportunities. These tools are designed to give you instant feedback on the value and chance for success on any trade you consider.

The primary risk of a covered call is limited upside. Let’s say that the stock of Company A rises above the strike price of the call option, and the buyer on the other side of the trade exercises the option. You would have to sell the stock at the strike price of the call, which is less than the market value at the time. The right tool can help you manage this type of risk through automated alerts before these and other events.

OptionsPlay® (which features such automated alerts) says consistency is a key. Applying consistent rules to exit and enter positions can have a dramatic impact on whether a covered call program is successful. These rules include identifying dividend timing and amount, the time to expiration and risk tolerance.

Webinar Invitation

OptionsPlay® can help you manage every step in a disciplined covered call program, automating all stock and option analysis, applying your client’s risk tolerance levels, and selecting a covered call with the potential to provide your clients with an additional income stream. Click here* to register for the OptionsPlay® webinar “Differentiate your Practice using Automated Income Strategies” on Wednesday, Jan. 25 at 4 p.m. ET.


You can explore the Scottrade® Advisor Services Strategic Resource Center to connect with OptionsPlay® and other organizations that specialize in technology, compliance, research, education and marketing. Many of these resources offer discounts to advisors who custody assets with Scottrade. (Scottrade provides this resource for informational purposes and does not specifically endorse any of the businesses within the directory. Scottrade also does not pass judgement as to whether those services are appropriate for specific business needs. Be advised this is not a full and comprehensive list of businesses that offer these types of products or services and that advisors are responsible for doing adequate research before making any purchases.)

* By clicking on this link, you understand you will be redirected to OptionsPlay®, a third-party website operated and maintained by OptionsPlay®. Scottrade and OptionsPlay® are not affiliated. The OptionsPlay® website contains information that may be of interest or use to the reader. Third-party websites, research and tools are from sources deemed reliable; however, Scottrade does not guarantee accuracy, completeness or timeliness of the information, is not responsible for statements, offers or products issued, and makes no assurances with respect to the results to be obtained from their use. No information presented constitutes a recommendation by Scottrade or its affiliates to purchase any product or instrument discussed therein or engage in any specific strategy. Please research any product or service carefully before purchase.
Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in the Scottrade® Options Application and Agreement, Brokerage Account Agreement, by downloading the Characteristics and Risks of Standardized Options and Supplements (PDF) from The Options Clearing Corporation, or by requesting a copy by contacting Scottrade. Supporting documentation for any claims will be supplied upon request.

The covered call option strategy may help generate income and offer limited downside protection, but does not provide full downside protection and may limit profit potential.

Scottrade® Advisor Services is a division of Scottrade, Inc. All products and services offered by Scottrade, Inc.-Member FINRA/SIPC.

For institutional use only.