Two ways which an investor can make some passive income off of their stock are through covered calls and dividends. Who can say no to getting some extra cash flow from a stock that they already own.

So what are they? Almost everyone is aware of dividends. When a corperation has a great dividend paying stock they pay their shareholders a portion of their profits. By simply holding a dividend stock an investor is receiving some passive cash flow without having to take on any more risk.

If you happen to have enough money lying around you may actually be able to invest in a company that pays out a dividend and live off of that dividend by itself.

Dividends can help investors make extra money from a stock that they own, however there are other ways to make money. There is another more profitable way of making money and it is called covered call writing. When an investor writes covered calls they sell another investor the right to buy their stock at a specific strike price on or before a specific date.

The biggest advantage to this is the huge payout that comes with it. An investor can receive a 2% 5% or more on their money every month just by selling a covered call.

There is a drawback to this as well. If the stock makes a big move in the near future that investor would be forced to sell their stock and miss out on a big chunk of the move. Basically you would get some money up front, but risk missing some profits in the near future if the stock goes up.

It is up to the individual investor to decide if it is right for them, but in general it can be a pretty powerful technique. Selling calls and investing money into dividend paying stocks both allow you to make some extra cash flow from your investment. If the stock also increases in price during that time then so much the better.