Covered Call Writing Options

anna — Sun, 22 Feb 2009 15:38:05 +0000

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

anna — Sun, 22 Feb 2009 12:10:31 +0000

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

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Covered Call Writing Options

Covered Call Writing