Apple (AAPL) has raced to the top of the “Magnificent Seven” leaderboard this year, notching three straight record closes.
That leaves shareholders weighing how much upside remains against the risk that earnings knock the stock off its highs
Investors who own Apple and expect a quieter move from here can consider a covered call, which generates income up front in exchange for giving up some gains if the rally keeps running. A covered call combines 100 shares with the sale of one call option. Because a standard option contract covers 100 shares, the investor needs at least that many shares for the call to be covered.
The investor collects a premium but may have to sell the shares at the option’s strike price. Here’s an example: An investor owns 100 Apple shares near $340 and then sells one Aug. 21 call with a $355 strike price. That options contract would have recently paid about $4.35 per share, or $435 total.