The Trouble with Covered Calls - Part 2
Uploader Comments (freedomschool)
All Comments (10)
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I dont have time to listen to your video, it sounds like you have found some strategy that manages risk... But people need to stop thinking about ways to predict stock movement and just concentrate on risk management. Trust me, the profits will find you, you must protect your principle! here you go, ill even share a little of my market strategy: "a neutral market position," if you cant figure that out and what its significance get into another business.
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And for highly volatile stocks, not only are the covered call premiums higher but also the price of the put opion. Zero Sum game.
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Selling covered calls is not a day trading strategy. Day trading is doing intra-day trades: your positions are never held over night where as if you are in a covered call, you keep your positions overnight.
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The idea of trading covered call options on volatile stocks is counter to the intent of the strategy. Choosing to sell calls on stock because of big premiums is day trading, not investing...
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Every Strategy has it's postive's and negative's. After trading it all - covered call is the best
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you sell covered calls on neutral stocks that you don't expect to move much, not one that is super volitale.
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It appears that selling CC's is still a good tool. It just has to be done correctly
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If you expect your stock to continue to rise, then you can buy the calls back and either 1) not bother selling any more calls 2) or sell an out of the money call option a few months out.
Yup. But then, insurance is never as costly as NOT having it when disaster strikes.
freedomschool 1 year ago