Wow! I can't believe how interesting the stock market is these days. Many people, including me, have given up trying to predict the direction of the market. Happily, I'm now in the position to say "Who cares!"
This attitude is not due to the fact that I have essentially surrendered to the stock market and relegated my future to fate. I have made a monumental change in my investment strategy.
The world is full of people that fail to see the advantages to covered call writing. Here is my favorite piece of advice I often get from these so called stock market experts "covered call writing fails because the market takes away your winners and leaves you with the losers". I find this hilarious. If my stock gets called away and I am left with an 8% return on my money for the month I am thrilled that I locked in that gain. Who cares if the stock continues to rise in value, I just made 8% for the month!
In order to be successful using covered calls the average investor needs to remain focused on their goal. Forget about what could have been. It is easy to lose sight of why you entered into a trade to begin with and instead focus on the unforeseen benefits that you never received. Consistent monthly returns of 2% to 10% gains will definitely more than make up for any appreciation at you lost when the stock was called away. Keep focused on your goal which is to make money!
Now that we've addressed the fallacy about the market taking the winners, let's focus in on the losers. Please be aware that stocks decline at a faster rate than they go up. Fear and panic sometimes force people to act on emotion and not on logic. It is critical that the covered call option writer protect himself in this situation. How is this done? It can be done rather easily, but the answer is beyond the scope of this article.
What if you can lock in those same gains while using a strategy to protect yourself if the market declines? Think about it, knowing exactly what your gain will be even before you place your trade. That, my friend, is taking control of your investments. The exciting fact is that you can do that reliably because I do that very thing month after month.
The key to being a successful covered call option seller is to remain focused on your goal and protect the downside. You must find a proven strategy that will allow you to stick to a plan regardless of which direction the stock market is moving in. Now you need to make a decision. Do you want to be the kind of investor that gambles on hopes of finding the next super stock? Or do you want to be the investor the builds wealth and becomes rich by using systematic, low risk strategies to beat the market month after month?
I've made my decision. - 23309
This attitude is not due to the fact that I have essentially surrendered to the stock market and relegated my future to fate. I have made a monumental change in my investment strategy.
The world is full of people that fail to see the advantages to covered call writing. Here is my favorite piece of advice I often get from these so called stock market experts "covered call writing fails because the market takes away your winners and leaves you with the losers". I find this hilarious. If my stock gets called away and I am left with an 8% return on my money for the month I am thrilled that I locked in that gain. Who cares if the stock continues to rise in value, I just made 8% for the month!
In order to be successful using covered calls the average investor needs to remain focused on their goal. Forget about what could have been. It is easy to lose sight of why you entered into a trade to begin with and instead focus on the unforeseen benefits that you never received. Consistent monthly returns of 2% to 10% gains will definitely more than make up for any appreciation at you lost when the stock was called away. Keep focused on your goal which is to make money!
Now that we've addressed the fallacy about the market taking the winners, let's focus in on the losers. Please be aware that stocks decline at a faster rate than they go up. Fear and panic sometimes force people to act on emotion and not on logic. It is critical that the covered call option writer protect himself in this situation. How is this done? It can be done rather easily, but the answer is beyond the scope of this article.
What if you can lock in those same gains while using a strategy to protect yourself if the market declines? Think about it, knowing exactly what your gain will be even before you place your trade. That, my friend, is taking control of your investments. The exciting fact is that you can do that reliably because I do that very thing month after month.
The key to being a successful covered call option seller is to remain focused on your goal and protect the downside. You must find a proven strategy that will allow you to stick to a plan regardless of which direction the stock market is moving in. Now you need to make a decision. Do you want to be the kind of investor that gambles on hopes of finding the next super stock? Or do you want to be the investor the builds wealth and becomes rich by using systematic, low risk strategies to beat the market month after month?
I've made my decision. - 23309
About the Author:
Visit Marc's website for more information on how to successfully write Covered Calls in a declining stock market
