A recent survey which we conducted shows that 88.9% of our members and subscribers are interested in puts and calls. Many of them have sold covered calls on Novavax (NVAX), the exchange-traded fund tracking the S&P 500 (SPY), Moderna Inc. (MRNA) and others, thereby enhancing their investment returns.
In line with the Monday Morning Program approach, they have been selling just out-of-the-money covered calls on a Monday with the expiry date on the Friday on the same week. The two advantages here are that the annualized returns tend to be more generous with closer expiry dates and significant untoward effects are less likely in such a short period.
We know that the market will be higher 20 years from now and 10 years from now and likely 5 years from now, but a week from today, there is a 50-50 chance of the market being either higher or lower.
That means that investors doing this regularly will be assigned half the time. In order to continue selling covered calls on the same security, they will need to buy it at a higher price. Nobody likes that, however…You need to login to view the rest of the content. Please Login. Not a Member? You can now sign up for a one-month free trial membership. Join Us