Proceed with caution on covered call writing
Making a case for a bearish outlook is one thing, but a strategy that profits from that view is quite another.
Cash flow will be king in a lower-volatility environment, and banks should begin to turn around. This has implications for options traders
Your clients might consider buying calls on some of the beaten-down sectors; if stability returns, they could do well
The price of an option hinges on an assumption of volatility, which measures how much the stock price is expected to vary from its current price — a position that is most clearly defined in the cost of an options straddle.
Overwriting keeps the bulk of a portfolio intact while the client enjoys an enhanced income stream
What makes this approach worth looking at is the certainty of time-value erosion. As the option approaches expiry, time value decreases
New course combines existing derivatives course and options licensing course
New ETNs and ETN options offer ways to profit from uncertain markets
Extending the concept of put writing to the “bull put spread” helps eliminate the risk of being blindsided by an unpredictable event