The case against covered call ETFs. Benefit: You may not be able to keep the stock and premium, and continue to sell calls on the same stock. However, it does Wyh the adjusted cost base for an investment and thus increase the potential capital Mwrket on sale. Alan can and always does speak for. Instead of purchasing call options, one can also sell write them for a profit. It's time to take profits in the Canadian equity market.
Managing the balance between Risk and Reward is the blight of every trader and investor. The Covered Call strategyor Buy Writeis one of the key strategies professionals use to manage Risk. And the US markets provide us with one of the most dynamic environments that are ideally suited for the Covered Call strategy. We call this strategy a Passive Income strategy, and one that every investor should be fully aware of.
None of us want to lose money in the markets, while we expect every trade we make to produce exceptional returns. One of the key strategies in managing the balance between Risk and Reward is the Covered Callalso known as the Buy Write. It is a lower Risk strategy that provides some downside Risk Management, while at the same time provides a premium cashflow, or as we like to refer to it, a Passive Income. And it is a strategy that just about anyone can implement!
With an easily understood approach, this strategy has become one of the most popular strategies for Mums and Dads and Self Managed Superannuation Funds. But to date, the focus for Australian investors has been the ASX. Trading this strategy on the US markets is actually an extremely easy process Trading Covered Calls on the US Market Why I believe it is simply requires the right broker to implement.
But it is consistency in returns that is the real key to creating wealth. If you are unfamiliar with this strategy, you might just be a little excited in what I have to say. This leaves the investor susceptible to falling markets, poor company performance and tax implications for selling long-term investments. The modern investor has the ability to avoid much of the negativity associated with long-term buy and hold strategies.
Instead, treating shares as an asset from which to generate cashflow. Here we can see that the Buy Write index black line outperforms the broader market between and Encompassing not only strong upwards markets, but also Bear markets or market crashes. From this graph, I am sure you can see that the potential for return is stronger from the Covered Call Buy Write strategy than merely just holding shares. But what I find even more exciting is using this strategy on Stocks and Exchange Traded Funds ETFs on the US markets.
I know many readers might think it too risky to consider investing in the US compared to Australia, but it has never been easier or more secure to do so, than today. In summary, not only is the Covered Call strategy a lower Risk approach to working the markets compared to just Buying and holding indefinitely, the US markets provide us with depth of liquidity, efficiency in costs and a detached time-frame for decision making.
If you would like to know more about this strategy, trading in the US markets or to receive a Free guest pass to our Covered Call Scanning tools, CLICK HERE and register now. Figures do not take into account brokerage or slippage. SinceMatthew has been involved in the Financial Services industry providing stock, option and CFD advisory services, trading advice, funds management and education services.
Matt is an Authorised Representative of Halifax Investment Services, providing analysis and recommendations for trading Covered Calls in the US markets and using Exchange Traded Funds ETFs for medium-term positions. In addition to this, he provides support to Australian Investment Education AIE in the development of educational services. ASIC Australian Financial Services License Number — Matthew holds a Bachelor of Business and after falling into the Financial Services industry inearned his Diploma of Technical Analysis ATAA before computers and online trading platforms were readily available.
A brief career in the military out of school instilled a level of discipline that has been priceless in a career providing trading and investment advice. His passion is using Stock and Index options to enhance investment strategies. Matt is an Authorised Representative of Halifax Investment Services, providing analysis and recommendations for trading Covered Calls in the US markets and using Exchange Traded Funds ETFs The information provided by Australian Investment Education Pty Ltd CAR to you does not constitute personal financial product advice.
The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Australian Investment Education recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances.
Australian Investment Education does not warrant the accuracy, completeness or currency of the information provided. Past performance of any product discussed is not indicative of future performance. We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance.
We may at times refer to third parties. Details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. Australian Investment Education has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties.
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Ultimate Guide To Covered Calls
Trading Covered Calls on the US Market. Why I believe it is the are ideally suited for the Covered Call Covered Call Strategy. None of us want to. Apr 26, · Trading Covered Calls: Patterson-UTI Energy Inc (NASDAQ: has done more than show us returns, Capital Market Laboratories. What are Covered Calls? Learn how to sell Covered Call The covered call is a strategy in options trading To achieve higher returns in the stock market.