Learn Options Trading Strategies | Options Trading Experts
Covered Calls I-A Possible Place to Start
When you embark upon your first adventure into options trading, there are those who will tell you that "covered call writing" is the safest strategy. Even brokerage firms allow novice option traders to trade covered calls in their IRA accounts. Little do they know. Or, if they really do know, little do they care.
Covered Calls II-The Realities
Successful therapy takes hard work. So does becoming a successful trader. Unfortunately, we live in a lazy world. Rather than put forth a little effort, many people hand over life responsibilities and tasks to others – then whine like spoiled children when the results aren't what they wanted. The path of least resistance isn't like the yellow brick road. It leads to the soup kitchen – especially when it comes to taking care of your money.
Covered Calls III-The Fix Is In
Everybody screws up. It's human nature. I spent two entire columns explaining what TO do – and what NOT to do – when using the covered call strategy. Did it sink in? I hope so.
Studies have shown that you have to be exposed to something a minimum of seven times before you comprehend it. So, read on. You may think you already understand what I'm about to explain, however, it's more likely (if you're relatively new to options) that you may be a little fuzzy on the subject.
Covered Calls IV-The Final Frontier
What do you think so far? We've gone through the covered call strategy quite thoroughly. There is a lot to think about when (preferably before) using covered calls. It's not a complicated strategy, but millions of people, who don't know what they're doing, are selling covered calls. Some may get lucky here and there, but, if they don't know how to protect themselves and/or when to get out of a position, they can get hurt. They end up with a portfolio of loser stocks that went down – and stayed there!
The "Collar" of Money
We've devoted a chunk of time discussing covered calls. There are good points and bad points to the strategy. My biggest problem with covered calls is that you're exposed for the entire value of your stock down to zero. That's a lot of risk – too much – unless you know how to control it.
Some people are obsessed, which is hardly breaking news. Controlling one's obsessions is easier said than done. But they say that, if you can admit the problem, it's half the battle.
