PT  - JOURNAL ARTICLE
AU  - Megan Miller
AU  - Brian Jacobsen
AU  - Martijn de Vree
TI  - Income Enhancement with Options
AID  - 10.3905/jod.2021.1.143
DP  - 2022 May 18
TA  - The Journal of Derivatives
PG  - 153--167
VI  - 29
IP  - 4
4099  - https://pm-research.com/content/29/4/153.short
4100  - https://pm-research.com/content/29/4/153.full
AB  - Investors have always tried to use various trading strategies to juice their returns. Writing options has often been thought of as a low-risk way to get some additional income (premiums) while not disturbing the underlying asset allocation. Sometimes, however, investors are caught off guard when their option strategy does more harm than good. In this educational piece we describe one of the most common option writing strategies–covered call writing–and the practicalities of how to manage these strategies so they hopefully don’t backfire. The key is to recognize that the returns from covered call strategies are related to the volatility risk premium (also known as the variance risk premium) as well as the equity risk premium.