Archive for call writing

Covered Call Writing Options

Sunday, February 22nd, 2009

I’m about to get involved in covered calls. I notice you prefer one month just OTM calls yielding 3-5%/month. I find this strategy offers very little downside protection and it would be easy to quickly slip into a loss position. I’m a novice but writing 6-12 month ITM or ATM Canadian bank calls with much larger premiums makes sense to me as it offers greater downside protection, more time to react to a downward movement, a greater opportunity to collect dividends and a greater chance of having my shares “called away” which to me is a plus as I only collect my maximum profit potential when that happens. I may even consider OTM calls if I think the share price has a good chance of going up. I would be happy if this strategy yielded 15-20% annually. Your comments would be greatly appreciated Anna. Thank you from Vancouver, BC, Canada

Covered Call Writing

Sunday, February 22nd, 2009

Anna, Thanks for writing your series of articles on trading, they are the clearest and most logical articles I have seen on the subject. I have a SIPP, from the time I was self-employed, and it is currently with Selftrade. I think that Covered Call Writing is a strategy that I would like to use in my SIPP to generate income, I already have a number of shares in there. However Selftrade are unable to allow me to write covered calls, they will allow me to buy them but not sell them if I don’t own them. I have had a “Google” but have been unable to find an online stockbroker that would allow me to write covered calls for shares I own in a SIPP. Are you aware of any such UK based stockbrokers? regards, David