Originally Posted by Jones5962
. . . It doesnít matter a hill of beans what is made in one month if that canít be repeated. Why, because you donít know the results ahead of time. Unless you have inside knowledge, which makes it illegal to trade
, then no one can reliably predict the up/down movements of stocks over the short term. . .
While my use of the word "conservative" as applied to the covered call trading strategy is true, it is only true in a relative sense. There are a multitude of Options Trading strategies, and, among these, writing covered calls lies at the tamer end of the spectrum.
Should everyone with an interest in trading pursue it? Certainly not!
And, as in all speculative pursuits, one never knows ". . . the results ahead of time." One can, however, uncover situations where the odds of success are considerably improved, and with the various trading software
available today, finding these situations is much less difficult. If/when a person finds a range-bound equity, covered call writing can be a way to generate consistent premium (income). Is success guaranteed? No, of course not.
Every human pursuit, in seems to me, is the result of contemplation of the risk:reward ratio. Where to go to college, who to marry, whether to have children
, where to live, what career to pursue, whether to buy a boat, a car, a house, a . . . well, you get the idea. The calculation occurs even if a person is unaware of it, and it is triggered by the survival instinct.
It definitely occurs in trading. A trader is constantly weighing perceived risk against potential reward. If you want certainty, buy government
bonds. There, the return on
your capital investment is guaranteed, and you have very little reason to doubt the return of
What does the removal
of risk get you? Pathetic capital gains that are less than the real rate of inflation, and a tax obligation to boot!
Eventual death is the only guarantee I'm aware of. The only other one that comes close is that fiat paper money
- legal tender
liabilities by government
edict - will ultimately return to its intrinsic value, which is zero!
In the entire history
of our planet, the number of fiat currencies that avoided this fate, so far, is also zero. As Winston Churchill put it, "All previous attempts to base money
on intangibles such as credit or government edict or fiat have ended in inflationary panic or disaster."