Winning 20% yearly on a covered call portfolio

[silk]

Is that a good covered call trader, is a good stock picker. Those that are succuessfull as covered call writers, probably would be even more successful if they just went long the stocks.

Likewise, a bad covered call writer, is a bad stock picker. But a bad covered call writer won't lose as much as a pure buy and holder.

So if you are a bad stock picker, than writing covered calls will help you. But if you are any good, just buy the stocks.

 

[Mispe]

Quote from yabz:



If you use IB the cost of buying shares is $.01/share and options $1/contract. The cost of commission on buying 100 shares and selling 1 call against them would be $2.

The bid/ask spread on shares is perhaps 1.5% and options perhaps 3%. If you roll up the options a lot that could eat into your profit but you have the same problem with naked puts or spreads.

I think the bigger danger is of the underlying collapsing.

According to my strategy you should have a far expiration put, in place so you are protected against any collapse. And in this case thinking about a possible rebound, you just wait the dust to settle and cash the put and replace it with another one just in the money.

But you are right the cost of commission is a problem. You have to negotiate with your broker the lowest commission possible.