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This is a cash generating strategy that not only offers downside protection that you otherwise wouldn't enjoy if you just bought stock, but also gives you ability to generate a consistent monthly income, for only minutes of your time.

However as with all option trading strategies, there are pitfalls that you will need to avoid if you are to be consistently profitable.

Here are a few tips that may help you write covered calls successfully.

Always check fundamentals of underlying stock and make sure that you would be happy to own even if options didn't exist.

A great resource for viewing fundamental 'ratings' for stocks is at http://www.morningstar.com

Don't enter a Covered Call trade just because option premium looks attractive. Higher option premiums (10-15% or more) often mean that stock is more volatile i.e. prone to huge price swings and therefore greater risk.

I personally target larger, more liquid and stable companies with monthly call option premiums between 3-6% range.

One of my personal favorites and a stock that I have had considerable success writing covered calls on over years is Oracle (ORCL).

I've also had consistent success with Intel (INTC) and Nokia (NOK). At times Nasdaq Tracking Unit (QQQQ) is also attractive (a 3% yield is highest I've ever seen it though).