Finance Articles

Covered Calls Shown as Best Investment Strategy by Investment Firm

(PRWEB) September 2, 2006 -- Discover the finer points you need to know to master this money making strategy. Discover how to manage your own money more effectively by writing covered calls on your existing stock positions or create a monthly income from covered calls.

Writing covered calls can be very profitable if done correctly. Many times covered call writing is an investor’s first introduction to options and as a result this strategy often ends with massive losses - thus convincing the investor that options aren’t for them. This is a huge mistake and is the reason we have decided to provide our clients with as much insight into covered calls as we can. Option strategies are the best and fastest way you can add increased return on investment without adding increased risk. Out of all the beginning level option strategies, covered calls are the most popular and effective. But there are some pitfalls you need to be aware of before you get started. We will cover this along with the basic strategy and best technique for success.

What makes this strategy so powerful and conventional investing so weak?

A conventional investment strategy will have your money diversified in two investment classes (equity and bonds) and split the equity section of your portfolio into three or four mutual funds and HOPE you get 6% to 10% per year. This strategy also offers no downside protection because it can take a mutual fund weeks or months to move their money (your money) out of a position. So if the market starts going down, you go down with it.

You personally can get in and out of positions in less then 8 seconds! Why put your money with the slow moving giant when you can run circles around them on your own. Use technical tools to get into a position before or right as they start their move into a section and then use those same tools to get out when they start to get out.

What makes covered calls so powerful? The answer: very simply, the rate at which you will be compounding your investment. Conventional investing - starting with $2000 and making 5% per year for ten years, you will have $3,257.79 (this doesn’t include taxes paid). Not much more really, better than nothing, but still only $1200 more than you had to start with and TEN years has passed. With covered calls you can average 5% per month! Let’s see what happens if you start with the same amount and made an average of 5% per month for ten years. Ten years at 5% per month starting with the same $2000, comes out to be $697,823.97!

That is the power of compounding interest, if done right. You could rush off and try writing a few covered calls or maybe you have with a little success, but it only takes one big mistake to wipe you out or lose the last few years of gains. That is why I have put together this information, so you can learn the pitfalls that wipe out average investors when they try writing covered calls. The worst thing that can happen as a result of this, besides losing your money, is if you decide writing covered calls is to risky for you – that is the worst, this is the most powerful money making strategy that exists in the market.

Learn the best strategies and how to avoid the pitfalls using our techniques. For the price of an average stock commission you can learn how to safely make a real income from covered calls. Cash flow from your investments is the key to financial independence. Stocks pay dividends and bonds pay interest, but you would have to have over a million dollars paying out 5% per year just to make 50k per year. That’s a lot of money that most people don’t have, or won’t have until they retire. By then you will need a lot more than a million to live off of because of inflation. Lets see how much it would take to equal the same amount per year using covered calls at an average return of just 3% per month, that’s 36% per year return. If you had only 139,800 paying out 36% per year it would roughly equal 50k per year. The same amount a million dollars paid out at only 5%. You can see how much of a difference this can make in cash flow for monthly income or making up the shortcomings of a retirement account.

•    Learn how to create monthly income from writing covered calls
•    Learn the basics of options that you need to know to write covered calls
•    Learn how to write covered calls in your IRA and retirement plans (tax free)
•    Learn from real life examples what a covered call actual represents
•    Learn what you need to write effective covered calls every single month
•    Learn which technician analysis tools to use to determine which covered calls to write and which ones to stay away from
•    Learn what makes conventional investing so weak and covered calls so powerful
•    Learn about the Pitfalls of covered calls that bankrupts most investments right from the beginning, when writing covered calls
•    Learn how to constantly make 3-5% per month returns writing covered calls
•    Learn how to protect your positions when writing covered calls on high risk drug stocks
•    Learn how to figure out your ROI and breakeven point using our free calculator
•    Learn how to read options chains and remove the confusion

Click the link below it learn more
http://www.capitaloptionsinc.com/index2.php?id=coveredcalls
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