No. of Recommendations: 3
But I believe I’m not getting to your point.

Actually you are. Your "difficulty" is the fear of the unknown:

However, mechanically speaking, I think the compounding aspect would be somewhat difficult. Trades the following year become larger and larger, or one has to do more of them. This is not to mention the difficulty in being equally invested (let’s just say fully invested) since calls are discrete trades and once one ends one has to find another quite quickly.

You would indeed have these worries if you haven't experienced the system. I'm still fighting some "bad investing habits" like anchoring, the fear of selling something at a loss. The plain fact is that an underwater stock is a loss and hanging on to it prevents you from deploying your money to better trades.

With traditional investing overtrading is a bad idea but this does not carry over to trading short term calls, max 30 to 45 days, the fewer the better. Today I sold four calls, two with eight days to expiration and the other two with fifteen. Finding calls to trade the conventional way is, indeed, hard. With a tool like my Call Selector it's easy.

The difficulty is that price has a bad reputation when, in fact, price carries all the information a market needs. If the price is low it's because there is little demand. If the price is high it's because buyers want the thing and supply is limited. The Call Selector instead of doing fundamental analysis just looks for the highest returns. The premium of today's four calls, averaging 12 days, are producing 4.45%. 4,5% a month annualized is over 50%. A more conservative Alan Ellman aims for around 2.5% a month, 30% annualized. While he certainly knows what he is doing, I have the better selection tool. After I finish this post I'm ordering the Kindle version of his Complete Encyclopedia for Covered Call Writing mostly for his exit strategies. I think he has the answer of what to do about bear markets.

Denny Schlesinger
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.