Covered Calls
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Covered Calls I want to start trading covered calls and being a beginner, I would like some advice. Thanks for your help. Seth
Hi Seth, The first advice is to choose ONLY stocks you want to own. Don't be tempted to buy stocks just because they have high-priced options. When teaching this strategy, I wrote three long, detailed chapters in my book. In other words, there's a lot to tell and a lot of advice. I cannot do justice to that in an email. However, the major risk of this strategy is a big market move to the downside. This strategy is less risky than owning stock, is more profitable, and it the perfect strategy for option newcomers - I just want to you know that this is not 'free money' and there is the same risk that anyone who owns stock has. You will have to decide which calls to write (sell) and that may take some practice to find calls that satisfy your needs. Each stock offers a bunch of choices. If you want plenty of details, my book, The Rookie's Guide to Options supplies that. If you prefer less information, Google 'covered call writing' and you will find far more than you need. there will be both good advice and bad. I also write a blog [http://blog.mdwoptions.com/options_for_rookies/] and in the right hand column, there is a 'categories' list. Click on covered call writing and there will be many blog posts to view. Start here:
I believe in taking a conservative approach - while other prefer to be very aggressive. Translation: I prefer more safety, less risk, and smaller profits. Other seek big gains and take more risk to try to meet that goal. This is a topic you can think about as you gain experience. Best regards, Mark On 7/26/2010 10:22 AM, sschochet@hotmail.com wrote: I want to start trading covered calls and being a beginner, I would like some advice. Thanks for your help. Seth -- Mark D Wolfinger Partner and Director of Public Relations Expiring Monthly: The Option Traders Journal http://www.expiringmonthly.com/ |
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