Covered Call Hype

Discussion in 'Options' started by Free Thinker, Nov 9, 2002.


    Monthly Cash Income From Stock Investments


    Compound $8,000 into $5,295,813 in Seven Years

    Enjoy $3,500 Per Month from $50,000 Value Investment


    i cant believe people can get away with making these kinds of claims anymore.selling covered calls in a bear market is just as risky as owning stocks.
  2. It sounds like that is how much the vendor made selling his covered call hype to the newbies...
  3. Like a fool I did this for quite a while, although pre the bear market. It is a great learning tool but an expensive one as the number one lesson is not to do it. Put this strategy on an option risk graph and you will see it is exactly like selling a naked put. In Thinkorswims' flashing comment section at least once a day they mention the analogy of the risk graph. On the good side of the strategy, is how deeply it impresses on you the importance of the action of the underlying as to whether you win or lose.:) I still chuckle because I made money on Enron in the $70s, had it called away and then left it totally alone.
  4. dreamer


    It's very easy to get locked into single level thinking.

    Covered Calls are not without risk. I prefer to trade naked options, calls or puts depending on various factors, and find it quite profitable.

    There are ways to lock in profits with options, making them risk free.

    Good luck,

    Bob on Whidbey Island

    "Don't confuse effort with results"
  5. nitro


    But this rarely involves taking the "outright" position - usually you have to start with the synthetic equivalent in order to do this correctly.

  6. dreamer


    Not true, nitro. Think outside the box.

    Good luck trading to all,

    Bob on Whidbey Island

    "Don't confuse effort with results."
  7. This guy sums it up - I think...

    People always get excited when they hear about this strategy called ‘covered call writing.' They like the idea of picking up income - who doesn't - but rarely grasp the significance of the fact when the train leaves the station heading north, they won't be on it.

    Don Chance
  8. I would worry about the stock heading south ...

  9. I agree...I know a woman who inherited 5 million dollars of
    Tandy stock from her grandfather. She had already decided she would never sell, but she let her stockbroker convince her she couldn't lose writing covered calls
    on a large chunk of it when it was around 11 dollars a share.

    The stock surged to 35 or so, and the calls had a strike of
  10. most stocks never head anywhere
    #10     Nov 16, 2002