As an entrepreneur, I need to diverse myself. Right now, all I’m doing is building and investing in businesses – online businesses, that is. My short term plans are to start or invest in a business, to invest in real estates, and to do stock investing.
I took a closer look at the latter – stock investing – especially because it’s probably the least I want to do in wealth building, because all seem too volatile for me. I understand that risk control is the key to manage the volatility. I decided to take a closer look into stock investing, including day trading.
When I search the web for things related to stock investing that not many people do (I assume that the opportunities are bigger in the arena which not many investors are playing in) I found something called covered calls.
Some basics related to covered calls – in layman’s terms
Covered calls are related to stock trading and option trading.
Regarding the latter – in layman’s term, option trading aims to profit from the movement of the stock prices, not on the stocks themselves. An option is essentially a contract between a buyer and a seller (writer) allowing the buyer the right to buy or sell before the expiration time at strike (agreed) price. Option trading involves put option and call option.
In put option, the buyer thinks that the stock price will fall at specified date; the seller expects the otherwise. In call option, the buyer thinks that the stock price will rise at specified date; the seller expects the otherwise.
To avoid confusion for newbies (like me) – here’s a suggestion made by Rich Dad Poor Dad’s Robert Kiyosaki to help you identify which is which: Call up and put down.
Now, covered call is related to call option (and the stock investing itself.) Covered call is a strategy that takes call option and buying stocks to a new strategic level; it involves two transactions: Buying a stock (or using a stock you currently own) and selling a call option against the stock. The combo of the stock’s long position (holding the stock long enough, expecting the stock price to rise) and the short position via call option is called covered call – a.k.a. “buy-write” transaction (called so because you do both the buying and selling (writing) in one go.)
Why doing covered calls
I am a newbie in the whole thing related to stock trading and would like to start with something that can yield me more than high rating bonds can do – 1 percent a year yield just don’t entertain me much, honestly speaking.
According to Born to Sell, covered calls can yield you 1 percent a month without taking much risks – this is a more ideal route to take, I suppose.
Since it’s a more advanced and technical investing to me, I need to stick to a site offering newbie-friendly advices and services related to covered calls to avoid information overload (reading Wikipedia’s entry on covered calls is enough to cause me a headache, let alone visiting dozens of other sites offering info and advices.)
Covered call investing using Born to Sell’s Services
First thing first – you might want to check out Born to Sell’s Covered Calls Tutorial before you do anything to avoid the unknowns that can lose you money.
Whenever you are ready, you can start using Born to Sell services to help you gain better profits from your covered call activities. I recommend you this site because the interface is clean, simple and fast. The Covered Calls Screener returns results quickly – saving you lots of research time, as well as helping you to improve your covered calls portfolio.
All in all, the site can help you find good covered call candidates to invest in, as well as helping you manage your covered call portfolio once you start investing in covered calls.
So, I have just commence my journey into good yield, low risk investing – ‘care to join me?
Ivan Widjaya
Ready to profit from covered call investments