Re: articles on covered call options
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Imagine the second week of August when your Apple stock was $120 you sold some covered calls at $125 for $4. Apple closed at $127 the last day of options.
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Hmmm? That figures out to a $9 gain in 2 weeks or about 7.5%. That's an annual return of about 180%. Nice trade!
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Someone owning the stock made double the gain and can still qualify for long term cap gains. Any long term holder who bought Apple at $10 and rode it all the way up to $140 would likely have cost themselves lots of profits by selling covered calls.
There is nothing wrong with being a trader, but it just seems naked options would be a better vehicle for trading than covered calls. For the long term investor you are losing upside a while lowering variance. If you need that, a better approach would be to add some bonds while keeping your equity holdings tax efficient.
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