Selling Options is no free lunch

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Article Submitted by: sagitarius84
Stocks - Options - Mutual Funds

Tags: Options, Calls, Covered.

Most investors believe that by selling covered calls or cash secured puts they could achieve additional income from the securities they own or plan to own. This additional return comes from taking on the additional risk of potentially exercising your options, which could hurt your total returns.

Submitted: Oct 19, 2009 Views: 72 Comments: 1 Likes: 2

View Article: http://www.dividendgrowthinvestor.com/2009/10/selling-options-is-no...

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Comments Received:

TinaRohr
(Unregistered)

But selling covered makes sense during periods of high volatility. If an investor had sold a call last March or even December 08, they would have done very well. Not only would the investor pocket the time decay, but they would also pocket the decline in volatility. Like anything it's getting in when markets are out of balance that provides good returns.

Posted: Oct 19, 2009

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The Best Savings Rates, CD Rates, and More

Other writing by sagitarius84

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