re: Options trading question?

Good summation. And yes, this is a strategy (covered call/buy-write) that many investors use to generate extra income in a portfolio. It's the most conservative of the options strategies.

Do take note that, while the stock price rising above the strike price would cut your gain, it's not really a loss. If you bought at $100 and got called out at $105, you'd still have a gain. But you would be at a (paper) loss if the stock sank to $95, while you were locked into this trade until options expiration. If that's not acceptable, you could always buy a put that's at a strike price that represents your stop-loss point.

And if you can get approved for naked call writing, you'd actually love to see the stock sink like a rock. But that's a risky strategy, because if you're wrong, and the stock rises above the strike, your losses could be infinite... at least until expiration.

Getting comfortable with at least basic options strategies is something that (IMO) every seasoned investor should do. You don't have to become one of the Najarian brothers, but you can dramatically increase your portfolio gains *if* you follow a strict and sound methodology with respect to options.