UYG - Covered Calls & Puts

Analyse the following two example trades with current prices on paper & see if you get the picture on how covered calls work & how a selling of a naked out works:

Trade 1 (Covered call example) :

Buy UYG at $5.3193
Next - Sell to Open Call UUFBE (Feb, strike price 5) at $0.90
Return = 11.xx% for 1.5 months

Stock gets sold at 5 if at expiration it closes at or above 5. You keep the stock if it closes below 5 & the cost basis now is 4.10 going forward.

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Trade 2: (Selling naked PUT)

Sell to Open Put UUFOD (March Strike price 4 bucks) for .45

Return = 10% for 2 months

Committment will be that if it closes below 4, you have to buy the stock at 4 bucks, but you already got .45 for it in advance. You will be assigned the stock, with a cost basis in that case of 3.55 going forward.
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