tv1113 said:
It seems like it's too simple to make money off of selling options, so what is the catch I guess
The catch is that selling puts and covered calls both limit your upside, while the potential downside is significant.
Let's say you have 100 shares of a stock worth $50, and you sell a covered call with a strike price of $55 and receive $100 in premium. The most you can make off of this trade is $600. Even if the stock doubles to $100 a share, you'll be selling your shares for $55. So $55-$50 x 100 shares, plus your premium you received of $100.
If that stock goes to $0, you're losing $4,900 (you keep the $100 premium but lose $5,000 on the stock.)
The thing to keep in mind about covered calls, is that if you're having to buy them back at a higher price, or if you're letting them exercise, you're rarely going to be losing money on the overall trade, you're just not going to be making as much as you would have made if you never sold the covered call. When you're 'losing money' on your covered call, the value increase in the underlying stock is almost always going to be greater than the 'loss' created from the covered call.