Strategy also allows you to profit from the certainty of time-value erosion
Overwriters are able to keep their shares while continuing to sell “out-of-the-money” calls for income
Although using volatility in this sense can be useful, it can also be quite complex
But conditions this year provide a classic case study on when not to write options against your portfolio
If you are an options trader who is serious about covered call option writing, you should take a look at the covered call calculator on the Montreal Exchange’s Web site (www.me.org). Once there, look for the “trading tools” heading on the right-hand side of the screen and click on “covered call calculator.”The covered call calculator […]
Options can be used in various ways to improve a portfolio’s returns and reduce risk
This approach works when option premiums are low, as they are now, to produce positive returns
Too often, calls are bought on a whim, without consideration of the risk involved
Motivation for investor, manager not always same
As advisors, we know about the different kinds of risk with which investors must contend. Business risk and liquidity risk are the two most common challenges associated with investing in individual securities. Such risks can be mitigated, or even avoided, by strong research, analysis and good advice. One way to hedge against business or liquidity […]