On Tue, Jan 30, 2018 at 2:09 PM, John Greathouse <johngreathouse51@gmail.com> wrote:
The idea is simple ... Real Estate investors buy a property and rent it out to collect monthly rental income ... hoping to both collect a profit and pay down the debt of the loan costs for purchasing the rental property. Real Estate investors hope to not incur many expenses throughout the year to ensure profitability.Covered Call Writers essentially do the same thing but instead of using properties they use stocks.Let me explain what a Covered Call is ... The option strategy where you 'Write a Covered Call' is simple ... the person writing the covered call owns at least 100 shares of stock, has the ability to sell options against it ... that person will sell someone the right but not the obligation to take theirs shares away from them for a certain price (seller dictates) and time frame determined by that same seller ... for that right, the seller gets paid a per share Premium that they keep regardless if his/her shares are ever taken away.Google it and you get this - Covered call writing is simply the selling of this right to someone else in exchange for cash paid today. ... A call option is a contract that gives the buyer of the option the legal right (but not the obligation) to buy 100 shares of the underlying stock at the strike price any time before the expiration date.Feb 9, 2017Typically Covered Call writers do this for 30 days generating a premium (mentioned above) of 3% cash on cash 20 day return on investment.Quick example would be ... say you own ABC stock at $50 and want to sell someone the right to take your shares from you at $55 and you want to give them just 30 days to make that decision ... someone will pay you $1 per share, up front for that right. That $1 the seller (ie, owner of the shares) keeps regardless if the shares of ABC stock gets to $55 or not. Its payment for the right to buy them.Generating $100 in 30 days ... $100 (the Covered Call premium) on $5,000 invested ($50 a share for ABC stock for 100 shares) is +2% gain for 30 days. If his shares are taken away at $55... the Covered Call Writer makes that additional $5 per share ... or a total of $6 profit or $600 or a 12% 20 day gain.Does THAT interest you? Well, I've done countless Covered Calls generating $300 and $400 a month on one stock ... typically I use 5 or 6 stocks collecting an average of $3,300 a month in 2017.I DON'T want to bore you reading a 9 page blog ... I have done many video's on this topic and will share the video links below if you're interested in continuing your learning.Youtube video'sHere's the original Poor Man's Real Estate - Covered Call videoHere's another one where I compare a rental property in Ohio vs using Microsoft stockCorePositionTrading BlogAs always, hope you enjoyed this blog post and I wish you the Best in Trading=========================================================== Core Position Trading, LLC is not registered as an investment adviser with the U.S. Securities and Exchange Commission. Rather, Core Position Trading, LLC relies upon the publishers exclusion from the definition of investment adviser as provided under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Core Position Trading, LLC does not offer or provide personalized investment advice. This site and all others owned and operated by Core Position Trading, LLC are bona fide publications of general and regular circulation offering impersonal investment-related advice to member and /or prospective members >USE AT YOU OWN RISK< and >FOR EDUCATIONAL PURPOSES ONLY<. Always do their due diligence (checking your own numbers for integrity) when putting hard earned money at risk and never risk more than you can afford to lose.All rights reserved - Core Position Trading, LLC - 2018 - http://www.CorePositionTrading.com and http://www.CPTDashboard.com
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