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Covered Call Tactics
You can adjust your overall Risk Level and Potential Returns by choosing different approaches of your common stock purchases and covered call tactical approach.
Conservative - Sell Covered Calls Immediately- Buy investment quality companies - open the call positions on the same day.
- Protect the stock position with Stop Loss Orders.
- Open the call position with the strike price in the money.
Moderate - Buy Stocks...Wait to Open Covered Calls- Buy investment quality companies.
- Protect the stock position with Stop Loss Orders.
- Once the stock price moves up, open the covered call position.
- Open the call position with the strike price near or at the money.
Aggressive - Buy Speculative Stock..Wait to Open Covered Calls- Buy higher risk speculative, higher Beta stocks.
- Protect the stocks with Stop Loss Orders.
- After the speculative stock runs up then open the covered call position.
- Open the call position with the strike price near what you paid for the stock.
Since the major risk of investing stays with the underlying stock, we recommend that you always purchase Investment Quality stocks. Vary the timing of your covered call sales and the strike price selection to fit your personal investment plan.
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