Like most “fun” portfolios, hers has not been much fun lately. That is true of most core portfolios as well. The majority of investors earn lower returns compared to the market’s average return. The Monday Morning approach to investing equals the market’s average return.
She is smart enough to keep her “fun” portfolio to under 10% of her stock market investments.
Writing covered calls on Novavax (NVAX), she lost $US10,990.00.
Mistakes are practice shots if we learn something from them. What did she learn from her NVAX loss?
She learned not to write (sell) covered calls at a just out-of-the-money strike price. That does produce the greatest premium income but with a 50% chance of being assigned on the Friday of that week.
She decided to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month. Safe, decent and guaranteed!
She also decided to write (sell) covered calls on a security which she would like to own long-term. After discussing the issue with knowledgable investors she decided that she likes Intuitive Surgical (ISRG).
The selected security will continue to generate premium income even when it declines in the short term. Intelligent investors ignore short-term fluctuations.
On Friday, August 5, she was assigned on her NVAX holdings and received $US83,250.49 in cash.
Using that cash, she bought 300 shares of Intuitive Surgical (ISRG) at an average cost of $243.76 per share for a total cost of $73,128.00 ($243.76 times 300).
She now writes (sells) covered calls on ISRG as you can see below.
What are her plans for today when the market opens at 9:30 AM?YOU NEED TO LOGIN TO VIEW THE REST OF THE CONTENT OR LEAVE A COMMENT. Please Login. Not a Member? You can now sign up for $12 for a one-year membership. Join Us