V. 21:1 (34): Explore Your Options by Tom Gentile

Explore Your Options by Tom Gentile

COVERED CALL STRATEGIES

With the market at yearly lows and the volatility of most options at yearly highs, I think covered calls would make a great strategy. I know you don’t like to do them because of the high risk, but with stocks down some 90% from their 2000 highs, the risks are definitely less than before. What do you think?— Rick F.

I can’t disagree with you. Hindsight tells us any bullish strategy now is going to have less risk than it did two years ago. First, I’ll describe covered calls for the folks out there who don’t know what they are. Then I’ll take a case study and look at it, along with an alternative.

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