> Please explain to me how I can lose money by writing a covered call option.
When you to sell the underlying to cover. It's right there in the name. Of course you lose money, it's just that your downside risk is capped.
> Us plebs aren't allowed to write naked options, that privilege only belongs to institutional actors.
Yeah because you'll probably lose all your money. Would you rather be allowed to do something incredibly dangerous and then get met with a dispassionate, "Well, almost everyone fails at this but you tried anyway, should have known better! Thanks for playing."?
Writing any amount of uncovered calls where the present stock price is at least higher than the teens generally exposes you to more risk than the average American can absorb with their entire net worth.
That being said, if you really want to, there are places that will let you do it using margin if you guarantee you know what you're doing. Bad idea though.
When you to sell the underlying to cover. It's right there in the name. Of course you lose money, it's just that your downside risk is capped.
> Us plebs aren't allowed to write naked options, that privilege only belongs to institutional actors.
Yeah because you'll probably lose all your money. Would you rather be allowed to do something incredibly dangerous and then get met with a dispassionate, "Well, almost everyone fails at this but you tried anyway, should have known better! Thanks for playing."?
Writing any amount of uncovered calls where the present stock price is at least higher than the teens generally exposes you to more risk than the average American can absorb with their entire net worth.
That being said, if you really want to, there are places that will let you do it using margin if you guarantee you know what you're doing. Bad idea though.