Questions about derivatives

On May 31, 2021, from Dr. Sharon Bader of Lake Pleasant Dentistry, Peoria, AZ, USA

Questions:

1. We have been writing calls on Coca-Cola, just as a test case to get a feel for the procedure. Do we have to buy them only for 1 week or can we do 2 weeks ?
2. How much can I estimate the stock to go up, I mean should I have a percentage?

Monday Morning Millionaire Program Answer:

Thank you for your questions, Dr. Bader.

Writing calls on Coca-Cola to get a feel for the procedure is a good idea. The risk in writing covered calls entirely comes from the underlying security, and Coca-Cola is a dividend aristocrat. The company has increased its dividend for more than 50 consecutive years! It is one of the largest holdings of Warren Buffett’s Berkshire Hathaway.