Unlike dividends from stocks, the premium received when selling a call option is not subject to taxation in Singapore. This premium can be used to purchase shares or options right after the call option is sold. This advantage is one of the many reasons why the covered call strategy is widely employed and popular among experienced investors.
Options strategies began growing in popularity after the establishment of the Chicago Board Options Exchange (CBOE) in 1973 when investors sought creative ways to enhance their returns and manage their risks using options.
Covered calls are one of the popular options strategies used by investors worldwide. This involves owning the underlying shares of a security and simultaneously selling a call option on those shares. The seller of the call option receives a premium from the option buyer, resulting in immediate income for the seller.
