Wow! The stock market is certainly interesting these days. Many people, including me, have given up trying to predict the direction of the market. Thankfully, I've found myself in the position to be able 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.
There are many people who simply don't 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 reasoning seriously flawed! 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. I am happy that I just made 8% for the month so who cares that the stock got called away.
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!
Since we have addressed the issue about the market taking the winners, we need to focus on the losers. Please be aware that stocks decline at a faster rate than they go up. People sometimes act on emotions such as fear rather than logic. It is critical that the covered call option writer protect himself in this situation. How does he do this? 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. The secret is in finding a proven strategy that will keep you on track 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 continually searches for 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.
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.
There are many people who simply don't 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 reasoning seriously flawed! 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. I am happy that I just made 8% for the month so who cares that the stock got called away.
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!
Since we have addressed the issue about the market taking the winners, we need to focus on the losers. Please be aware that stocks decline at a faster rate than they go up. People sometimes act on emotions such as fear rather than logic. It is critical that the covered call option writer protect himself in this situation. How does he do this? 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. The secret is in finding a proven strategy that will keep you on track 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 continually searches for 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.
About the Author:
Visit Marc's website for more information on successful Covered Call Strategies in a down stock market
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