Writing covered calls may seem to involve a lot of complex analysis and decision making.  This is sometimes the case, but this options strategy can be rewarding and successful at any level of complexity.  It’s really up to you.

Many people enjoy playing golf.  Some aspire to achieve professional standing and play along side the likes of Tiger Woods.  Just because you cannot see yourself in such company does not mean that you should give up on the idea of learning to play golf altogether.  You just have to lower your threshold of accomplishment a little.  Perhaps you just try to consistently break 100 at your favorite course.

Adopt the same mindset for your covered call writing.  The selection of the underlying stock and the particular call option to write can tailor the strategy many differing risk tolerance levels, changing market conditions, as well as numerous goals and time frames.

I am also going to challenge you to think of the covered call in a new way.  When you sell a call option against stock you own, you have created a covered write position in your account.  Now consider stepping beyond this single position and adopt a new way of thinking, so as to continually be looking for covered call opportunities and making option writing an ongoing activity that affects both the makeup and performance of your portfolio.

When you adopt this new mindset and put it into action you will have adopted a new investment strategy. Such a strategy will not only alter the risk-reward parameters of your stock portfolio, but it will also change your investment/trade selection process, your expectations of overall portfolio returns, and your position management.

This new strategy will require a bit more effort on your part than the traditional “buy and hold” approach, but it also holds the potential of significant benefits if you learn to implement the strategy in an appropriate risk averse manner.  Developing the necessary skills can be treacherous in today’s financial education marketplace, however  So many people are promising so many things, it is difficult to know what can realistically be achieved with the covered call.

We have had presentations on the covered call strategy in the past and we have talked about differing approaches that included covered call campaigning on broad based index products as well as modulated covered writing.  I wanted to expand beyond these concepts to something a bit more sophisticated and capable of generating meaningful annualized returns.

When it comes to trading covered calls I have come to rely upon the insight and experience of John Brasher.  He has been a dedicated covered call trader for many years, has lived through difficult markets with this strategy, and has learned how to survive and thrive with it.

John Brasher has agreed to join us on Tuesday, February 9, 2010, at 5:00 p.m. PST.  During this presentation we will watch as John walks us through the process he uses to find and plan covered call trade.  This goes beyond those scans on your broker’s website that find the most expensive call options out there.

After all, there is a reason the premiums on some stocks are so fat and introducing that kind of risk to your portfolio may be one of the dumber notions out there.  You must know how to separate the good covered call trades from the junk.  It’s the difference between making a prudent investment versus a reckless gamble.

Not only will he show us how to do that, but we will also learn how to protect our account from the inevitable losing covered call trade.  We are all human.  It is not reasonable to think you will never have a losing trade.  So, you had best learn how to deal with one.

Register For Our Covered Call Webcast Featuring John Brasher
“Not Your Daddy’s Covered Calls”
Tuesday, February 9, 2010
5:00 p.m. PST / 8:00 p.m. EST

If you would like to learn a responsible approach to covered call trading, then I would like to invite you to attend the February 9th presentation as my guest.

I’ll see you there.

Christopher Smith
TheOptionClub.com