Covered Call Option – 7 Good Investment Strategies You Can Learn In Front Of Your Computer
While investment strategies require a great deal of care and planning, they can be a great way to supplement or replace your current income, if so desired. Investing is also an alternative way to work from home. With that said, I strongly encourage you to do your due diligence and invest wisely. ~ Alan
Finding some truly great covered call option investment strategies is not as simple as many people might think. The reason for this is that although the internet abounds with numerous opinions and advices with regard to investing money in covered call options, they are so diverse that choosing the best one is almost impossible. However, what you can do is to get the top investment strategies and decide on the best possible alternative for you. In order to help you with this, the current article presents the top 7 investment strategies, which can teach you the most important things that you must know about investing in covered call options.
The Top 7 Covered Call Investment Strategies for Falling Markets
Unfortunately, the specialists are talking these days about falling markets and the disasters they engage. Everywhere we look, we can see the international indices increasing a little bit only to fall more than before. But, even in this financial environment, there are specific covered call strategies, which can help investors to get some hefty profits. Most strategies can be implemented with the help of three distinct methods, which include LEAPS, index futures, and ETFs bought on margin.
Although these methods relate to the same financial objective – which in this case is generating profit – their mechanics are completely different. This thing actually means that they suit various situations and requirements based on the investors’ targets. However, as the main scope of this article is to reveal the most important covered call option strategies that you can apply in order to register some great profits even in falling markets, the methods that you may use for implementing these strategies are not that important. The rest of this article concentrates on explaining the top 7 strategies for covered call options.
1. LEAPS Covered Call Strategy
The LEAPS covered calls are those options that include a minimum period of nine months until the expiration date. In most cases, these calls can be purchased based on underlying security. The short calls that belong to LEAPS processes are usually sold monthly and the operation repeats until the covered call expires at the end of the nine-moth period. The cost of these options is determined by a few factors, including long-term volatility, expiration date, interest rate, and intrinsic value.
2. Index Future Strategy
Another strategy is to get covered call options with index futures. The index futures actually refer to futures contracts, which give investors the chance to get security in order to set prices in the future. In most cases, the prices incorporate the cost of invested capital – that is equal to the call rate – from which the broker extracts the dividend yield. Thus, as you can easily comprehend, the futures calls are actually securities, which give institutional investors the chance to become retail investors and earn more profit than if they would use other strategies.
3. Covered Call Options in Margin Account Strategy
Margin account allows investors to buy different securities with the help of borrowed money. If an investor possesses options and margins in the same margin account, the person in cause can use a leverage strategy. This thing can be done by purchasing an ETF or stock on margin and selling monthly covered call options. It is essential to know that this strategy highlights some potential pitfalls, which underline situations when the interest rates vary widely and call options decline in value. Therefore, before opting for this strategy, an investor must ponder any related risks carefully.
4. Leverage Strategy
By choosing leverage investing strategy, an investor can complete various investment tasks with borrowed money. Usually, an investor, who chooses this investment plan, must use covered calls with low volatility, which ensures increased returns.
5. Covered Call Return Strategy
In most cases, this strategy pairs a short call option with a long position. This combination is able to deliver high returns of investments due to low volatility. The reason for this is that, even in the falling market, the covered call premium usually reduces the effect of negative returns, making them positive.
6. Complete Option Report Strategy
By simply using a Complete Option Report, you can make money in different markets. This thing can be done by trading stocks based on the markets’ weaknesses and strengths. If you regularly check the Complete Option Report, you can choose the most profitable covered call option trades.
7. “Naked” Call Strategy
This strategy teaches you to use an interesting twist. You can write a call option without having 100% stock shares. This thing indirectly means that you write a “naked,” also known as uncovered call. It is important to know that this strategy may be implemented with the help of a contingent buy order, which helps you to purchase a stock at the call’s strike price.
If you succeed to apply these strategies, you can be sure of the fact that you will record some hefty profits even in falling markets. If you opt for one or more strategies, you can increase your profits with about 12% more than you usually generate.












