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Generating Income With Options

What Are Covered Combinations?

A covered combination doesn’t aim just to generate income, because it can also help the disciplined investor find the best time to make the right move. The combination consists of a covered call (long underlying and short a call) - as well as a short put on the same underlying. The strategy can be useful for the investor who not only has a neutral to bullish outlook, but is also open to the idea of owning additional shares of the underlying should the market pull back.