|12 Sep 2010||#1|
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Hi all -- any Stockmarket Gurus out there (Covered Calls)
I've dabbled a bit in the Stockmarket but would like to do it a bit more Seriously as I'm getting too old traipsing around the world on tough I.T contracts these days.
Somebody mentioned "Covered Calls" which if done correctly ssems to be a reasonable money making proposition. ( I'm NOT SELLING anything here -- just want some more help from some Market gurus who might have dabbled in this stuff).
For example you have 100 shares of XXX which are reasonably stable say at 38 USD a share
You can SELL a covered call on these which says for example I will SELL you my shares at 40 USD share any time within the next 30 days for which you pay me 2 USD a share -- so whatever happens 200 USD is IMMEDIATELY credited into the account. If the share does NOT go to 40 USD the option is not exercised and you've STILL got the shares PLUS the 200 USD .
If the shares DO move to 40 usd and the option is exercised ("called out") well you've got the 200 USD + the stock has sold at a profit too.
Even if shares start going down you can "buy back" an option at a lower price and sell the shares still making a profit if the option selections are OK
If you pick reasonaby this seems to be a good way of working even in decining markets.
Of course it's not THAT simple , shares go down etc etc but this method of trading seems to offer possibilities even for SMALL investors.
Anybody had a go at this.
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