When an investor learns about covered calls, often a light goes on in that investor’s mind. They suddenly realize that they do not necessarily need to buy a stock and hope that everything works out. They could take that stock and turn it into a profit and income generating machine through a simple covered calls strategy. Many covered calls strategies have provided investors with substantial gains in their portfolios over years and rolling covered calls. Many other investors look upon covered calls as a “rental” method for generating profit and income and reducing their cost basis in the stock they have purchased.
This index lists a variety of articles focused on covered call topics and strategies. The articles discuss applying covered calls to generate profit and income and reduce the cost basis in purchased stock. Articles are continually added to this index. To stay up to date consider subscribing via the RSS feed which sends all articles from the FullyInformed website as they are released. As well you can consider signing up for email updates. or join my Twitter account.
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- Deep In The Money Calls is not a strategy that will get an investor rich. But Deep In The Money Calls can be an exceptional strategy to consider in a bear market. Deep In The Money Calls can allow an investor to stay with a stock through a bear market turbulence and come out at the other end with his capital still intact and still retaining his stock. It’s not a strategy for those seeking optimum profit potential but it works very well for long term investors who want to hold onto long term positions in stocks, have some of his capital returned while watching stocks fall in bear markets. Deep In The Money Calls offers profit and a great deal of protection.
- This article looks at the successful use of rolling covered calls down to protect a stock and continue to earn the dividend and some call premium income all the while going through a severe bear market. This type of profit and income strategy can pay big dividends for the investor who learns how to profitably roll covered calls down. The trades are actual trades from CAT Stock during the 2008 bear market when the stock lost more than 50% of its value, yet the investor ended up retaining the stock and having more than 35% of her original capital returned to her in the downturn. This is an excellent example of the power of learning how and when to roll covered calls down.
- This is a PDF article (31 pages in length) which illustrates a Covered Calls Strategy for investors who have long-term stock or ETF holdings in their portfolio and wish to sell covered calls against those holdings for income, profit and protection against large declines. Many investors are concerned about selling covered calls against their long-term stock holdings, particularly when building a dividend portfolio. They fear they will be exercised from their long-term stock. Other investors consider selling options of any kind as risky. Neither is true if done properly. The biggest risk for investors when using covered calls is failing to have a strategy that they understand and can apply consistently against their stocks or ETFs. The Hide and Seek Covered Calls Strategy is designed specifically for long-term investors who want to earn income and profit as well as protect during periods of market declines and bear markets.
- The Hide and Seek Covered Calls Strategy is designed around dividend stocks and explains in detail the tools to use for timing when to enter covered calls trades and when to exit. The Hide and Seek Covered Calls Strategy assists investors in understanding how to profit from market declines rather than panic and how to determine when a stock is undervalued and at what price point to consider buying additional shares for extra profits in rebounds and rallies. For more details, this read the outline of this strategy paper.
- In this article looking at covered calls on a dividend paying stock, I look at how the profit and income strategy of using covered calls can improve the income earned by an investor holding Illinois Tool Works Stock (ITW Stock) and protecting his stock position from both loss and exercise.
- This article looks at CAT Stock (Caterpillar) as I look at the decision making process that an investor can use to determine when to roll covered calls forward, where to roll them, in other words which month and what strikes to consider and how to roll covered calls for the best profit, protection and future profit potential. This is the kind of profit and income strategy that can not only earn decent profits but also allow an investor to ride a bear market out while also retaining his shares.
- This article looks at a covered call trade on Microsoft stock that will earn 3% for 1 month. This profit and income strategy is presented here since it can be applied to numerous stocks.
- When a stock is in a serious decline, I believe strongly that investors are better off getting out early or purchasing protective puts as part of the ongoing profit and income strategy. But some investors hope to hold the stock long term and are not interested in purchasing protective puts. Many investors feel that buying protective puts is lost capital if the stock should recovery. In this article I look at rolling covered calls down on a declining stock in order to recover much of the lost capital.
- In this profit and income article two investors approached the collapse of Bank Of America in 2008, differently. The first trader sold calls below his cost basis and if exercised, bought back into the stock with whatever capital he had acquired in the exercise. The other trader continued to average down whenever he could no longer sell covered calls. This excellent article shows the importance of staying positive when caught in a collapsing market and retaining the original profit and income objective and goal.
- This strategy is only available in PDF format within my store. The Gambler Covered Call Strategy is in the PDF 4 INVESTMENT STRATEGIES FOR ULTRA ETFs. The Gambler is one of the 4 investment strategy articles included in the PDF download.
- The Gambler uses the market timing technical indicators of Bollinger Band, Momentum, Ultimate Oscillator and Rate Of Change to time selling covered calls and buying them back early and then waiting for the same cycle to repeat. The Gambler likes to sell covered calls close to his break-even and build up his cash flow quickly. He closes his positions early and often. He opens new positions quickly based on his technical criteria and closes them at any sign that would indicate his trade is changing or is wrong.
- The Gambler Covered Call Article Strategy shows actual trades and how The Gambler investor applies his market timing tools to pick optimum moments to sell covered calls and how he buys them back for profits. Being a Gambler he always leaves himself “wiggle” room and keeps a specific number of shares uncovered in order to rescue his underlying security. By doing this the Gambler not only grows his investment in the underlying security but he also compounds his investment, reduces his overall cost basis of the shares purchased, takes advantage of rises in the underlying security and has some protection against declines in the share price.
- In the article I explain the technical settings of each timing tool used and how they are applied and read by the investor. The actual examples of the trade also show how The Gambler Strategy handles trades that do not work out and how they are returned to profitability. The strategy is not overly complex but like any financial investment strategy the investor needs to understand the tools being used and how to be consistent in applying the strategy for maximum profit potential. While this strategy is designed for use in Ultra type ETFs it can easily be applied to standard stocks including commodity related stocks in particular. There are a total of 4 strategies in this one paper which can purchased within the store.
The Cry Baby Stock Trading Strategy – Using Covered Calls To Fund Stock Purchases
- We have all been Cry Babies at one time or another. We have bought stock only to watch it plummet and then ended up saying “if I had more capital I would buy more right now!”. When a baby cries, parents often use a soother to calm the baby down. In this strategy Free Money is the soother. The Cry baby strategy shows how to find additional capital through selling covered calls that can be used to earn capital while waiting for the underlying security to recover. It shows how the Cry Baby strategy is used to continually benefit the investor and set up a strategy that can generate additional income, compound that income and keep some shares uncovered to take advantage of possible rises in the share value. There are a number of examples including a Bank of America stock example from the crash of 2008 where an investor down almost 90% in stock valuation used the Cry Baby strategy to end up with a 67.4% total return in 13 months. It is quite the strategy and among my favorites to employ. This strategy is only available in PDF format. It is in the PDF, 4 INVESTMENT STRATEGIES FOR ULTRA ETFs which includes The Gambler Covered Call Strategy (above), The Twin Sister Put Selling Strategy and The Shark Option Trading Strategy. This unique covered calls strategy article is included with the Gambler Covered Call Strategy in the fullyinformed store.
- The only way to grow and compound capital is through successful investing. But investing blindly and hoping the trade works is a poor strategy. In essence it is not a strategy at all. Many investors buy stock and sell a covered call and sit back hoping for the best. While it can work often it does not or certainly the results are not as high as could be achieved through learning how to determine support and resistance levels in stocks. In part one of this support and resistance article on support I define what support and resistance is and how I use charts to assist in establishing where support and resistance in a stock is. In the article I look at Johnson and Johnson stock and PepsiCo Stock to explain the importance of support levels for selling covered calls successfully.
- In Part 2 of the series looking at Support and Resistance I present the volume indicator tool and how when combined with the stock charting toolit will assist in pinpointing where support and resistance lies. I then show how through using volume and charting a covered call investor can sell calls at prime call option premiums and often not have the stock exercised away. For those investors seeking to be exercised so they can repeat the cycle, knowing where support and resistance lies in the stock will allow them to sell covered calls at the money or in the money at the most opportune moment for high call option premiums.
- This article offers a number of strategies to a reader wondering how to rescue his position in Chevron Stock. The article is of interest as it discusses covered calls strategies including rolling as well as deep in the money covered calls.
- This article studies the use of in the money covered calls as it applies to stocks. The stock being used is Walmart Stock. In the money covered calls can provide protection, good income and set up a strategy for repeat performance.
- When a stock begins to rise and then seems to stall, investors are anxious to sell covered calls and earn terrific premiums. But at the same time, long-term stock holders are worried that the stock might rise even further and leave them holding in the money covered calls and placing their long-term stock position at risk of exercise. This article present a strategy which investors can use to determine the peak period to be selling covered calls.
- A lot of investors sell covered calls and then watch as the stock rises, leaving their covered calls deep in the money. For stocks that pay dividends, many investors simply let the stock be exercised away because they do not know how to squeeze a little more profit from their covered calls. Instead consider this simple strategy to make the investor who bought your deep in the money covered calls, work harder for his profit.
- When covered calls are sold investors often find that they have limited their returns by selling the covered calls. Often the stock moves higher but the investor who has sold the covered calls can no longer participate in further capital gains. This article studies using covered calls for profit and further gains and how to handle rolling covered calls higher to participate in a stock moving higher and earning additional capital gains.
- Often when covered calls are sold, the trade is set to end at a specific valuation point. Sometimes though an investor will want more, especially if the stock moves higher and leaves the covered calls in the money. It is only natural to try to squeak out more gains from a trade. This article looks at 3 different strategies to rescue in the money covered calls when the plan is to reap more profit from the trade. Here is a fourth strategy to consider as well.
- This article shows a trade in Seagate Stock in which a position of covered calls, designed to have the stock exercised failed. To keep this trade as profitable as possible, a roll down in covered calls must be done to follow the stock lower. Many investors fail to follow a decline in a stock and end up with far out of the money covered calls that expire, but with large losses as the stock falls. Instead by learning how to roll down covered calls, investors can continue to profit and protect their capital in use.
- An investor found himself in what he describes as a crazy situation with his covered calls. This strategy article presents 4 rescue strategies the investor could consider for his Covered Calls.
- Selling call options in bear markets can be highly profitable, but in a bear market they are not as profitable as holding put options can be. That though is pretty obvious. Nonetheless, selling call options can provide excellent returns in bear markets, but like all strategies, they can also end with losses, especially when a stock moves back higher. In bear markets, volatility is higher and stocks can gyrate quickly and unevenly.
- One way to build confidence in a sideways market is to choose strategies that focus on protecting capital that is being used. Selling out of the money put options can protect capital since I am almost always selling at a put option that is below where the stock is trading. This gives the stock room to fall with the hope that the put strike I have sold will not be reached.
- Not everyone enjoys or can sell put options all the time. As well many investors are more used to traditional investing where shares are bought and then sold for a profit. Unfortunately that does not always work. Instead I prefer strategies that stacks the odds of success in my favor. Those strategies need to include limited exposure to risk for my capital but still a decent return. To do this I developed a strategy years ago built around the buy-write method of selling covered calls. I have used this strategy for decades. I call it the Super Charge Buy-Write Strategy.
- When an investor wants to retain stock ownership and is selling covered calls for income only, they should never sell calls against all the stock held. For example, if an investor has 1000 shares and sold covered calls on all the shares a rescue effort is far more difficult and often not profitable. Instead if this investor had covered just half of the shares she could have used the uncovered shares to assist is rescuing those that ended up in the money. At the very least, by not having all shares with covered calls, she would have participated in more upside and still have earned some income on the remaining shares which would be exercised.
- Sometimes investors using the Super Charge Buy-Write Strategy end up with losses when exercised. This article looks at how to set up the trades to protect capital being used as well as the expected profits and avoid losses.
- Market corrections and subsequent rallies often leave investors whipsawed. Instead of making a profit they end up with losses as the market correction draws them into the short side of trades and the rally sees them trapped holding short positions intent on profiting if the market had collapsed further. As the rally strengthens those who are short worry more. It can become devastating for an investor and losing capital often leaves an emotional scar on investors. It is what keeps many investors from returning to stocks.
- We all like to keep income flowing into our portfolios. Holidays though can be tricky and the longer the holiday the more problematic it can be to keep generating income. An investor emailed wondering about using covered calls to generate income while on a 2 month holiday. He concern is lack of trading access while on holiday. However holidays are meant for relaxation and should not need an investor to be checking his stocks or the market while on holiday. I have seen many investors who travel but are still chained to their smartphone or their hotel room or lobby for wireless access to keep checking trades. I have been on holidays where friends have made sure that all the stops along the way are at locations where there is wifi available so they can check trades throughout the day. This is not really a holiday. This strategy article for members is 1700 words in length and looks at 3 different scenarios for investors interested in covered calls to generate some income while on holiday
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.