Feb 11, 6: Feb 26, 9: Writing covered calls is a tactic that can improve returns within your RRSP when stock prices are range-bound. CBC does not endorse and is not responsible for the content of external links.

When he or she is exercising the right to sell an asset, the option is called a put. Writing a covered call is different from the above example because it involves selling a call option. Here are three more definitions: Writing is broker-speak for selling.

Covered means you already own the underlying stock on which you are selling the option. And the price at which the call option buyer can buy the shares is called the strike price. So, writing a single covered call contract means you sell somebody else the right to buy shares of a stock held in your RRSP at a certain strike price at any time out to a certain date.

If the stock fails to rise to the strike price, you get to keep the money paid by the call buyer as well as the stock itself. No call buyer will exercise an option to buy a stock for more than it's worth on the open market. You set a target for yourself of getting at least a 15 per cent annualized return. That's a return of 16 per cent, when extrapolated out over a year. Compounding that higher return for several stocks over the life of your RRSP can considerably increase the size of your retirements savings.

ijiyyyiqic.web.fc2.com - RRSP, RRIF, RESP, RDSP and TFSA Qualified Investments, US Dollar Registered Accounts

But Louis Gagnon, a professor of finance at Queen's School of Business in Kingston, Ont. There are other risks associated with selling covered calls besides missing out on an unexpected gain in the stock's value. And the values of options tend to be less volatile when trading in the underlying stock is flat, making it difficult to get a decent return for selling a call.

For the same reason, it's also a strategy that is difficult to benefit from consistently without being disciplined about sticking to your targets for acceptable returns. Recent shows and interviews. Not everybody who works from home qualifies for tax breaks. Kids Documentaries Comedy Books Parents Indigenous Digital Archives Podcasts Games Contests Site Map.

CBC User You currently have: Subscriptions Go to the Subscriptions Centre to manage your: CBC Newsletters Daily Digests Breaking Alerts. Log Out Log out of your CBC account. CBC News Business Canada Votes. Business Tax Season CBC SecureDrop Photo Galleries. Selling options on stock in RRSPs is risky way to boost returns. Related Stories Today is last day to buy RRSPs for tax year No magic bullet for smart RRSP investing in A user's guide to RRSPs 5 investment tips that challenge conventional wisdom.

External Links Options FAQs Options FAQs Note: Report Typo or Error Send Feedback.

CBC News | Business: RRSP Season

Stay Connected with CBC News. Mobile Facebook Podcasts Twitter Alerts Newsletter.

What's new this year April 28, No, say developers April 24, 4: It's already happening in some countries March 24, 1: Watch The Exchange here. Recent shows and interviews Recent discussions about business news and newsmakers. Money-saving tips 9 things you can do to avoid some common, costly mistakes Home offices Not everybody who works from home qualifies for tax breaks Delay deductions When it pays to put off that tax claim Investor advice How to protect your investments from the taxman Employee benefits Not all benefits received on the job are taxable Instant tax refunds Discounters deliver cash quicker - but at a cost Spousal RRSPs When do spousal RRSPs make tax sense?

Tax myths 10 tax-filing myths that could cost you money EI refunds Family businesses may be paying EI premiums needlessly RESPs Education savings plans are profitable but undervalued.