The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  http://boards.fool.com/i-too-have-considered-these-as-a-means-of-29073664.aspx

Subject:  Re: covered calls Date:  2/1/2011  9:18 PM
Author:  BruceCM Number:  68357 of 76082

I too have considered these as a means of supplementing income.

But there is a major trade-off...the risk that you will lose any appreciation in the stock's price. This risk raises the question: can you predict the direction of the stock's price over the call period. Well, who do you think is on the buy side of the call you've written? Tyically, these buyers are pros who comb the newly sold options, looking for unsophisticated investors selling options into unfavorable (to the seller) markets. This certainly doesn't mean that the stock price will necessarily rise to the call price...only that the odds are working against you.

I suggest you leave options trading to those who do it all the time.

BruceM
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us