- Our fearless, intrepid investor has been following the six habits that we recommend and also writing (selling) covered calls on each Monday, expiry date Friday of the same week, using SPY as the underlying security. She often selected a strike price a few dollars out-of-the-money to take advantage of any growth if it occurred.
- Last Monday, May 29 was a stock market holiday, so she wrote the covered calls on Tuesday, May 30, expiry date last Friday, June 2nd, strike price $4.00 above market price.
- She also bought some Coca-Cola (KO) board lots in her “fun” portfolio to write covered calls on it.
- Both SPY and KO rose above her strike price, she was assigned on both and was entirely in cash.
- She made a decent amount of money safely but would have made more had she simply held SPY and KO without writing covered calls on them.
- Two points here.
- One, in rising markets, investors do better holding a security than they would do writing covered calls on it.
- And two, there will always be better investments than the ones you have.
- What will she do when the market opens today?
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