tag:blogger.com,1999:blog-8933321108111349285.post7759962508851709916..comments2023-11-02T00:25:02.196-07:00Comments on Options - The Naked Truth: A Look At Covered Calls - Jan 9 updateUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-8933321108111349285.post-37661071812844756692012-02-18T13:10:13.772-08:002012-02-18T13:10:13.772-08:0010% per month. Therein lies the rub. Collecting 10...10% per month. Therein lies the rub. Collecting 10% premium on an ~30 day time frame means selecting buy/writes with very high native volatility or stock in periods of very high IV for whatever reason. One would assume movement in the underlying to more or less reflect IV in the time frame selected.<br /><br />Assuming you wrote ATM, there is approximately 50% probability that movement is to the downside, gaining deltas as you go. Ergo some of those buy/writes will not be overall profitable to the tune of 10% at all including some substantial losses.<br /><br />This is what I'm doing here. It's not a perfect example, but over time it will show the vagarities of the covered call strategy and that talk of x% per month compounded as largely nonsense.Adminhttps://www.blogger.com/profile/04580741757235510109noreply@blogger.comtag:blogger.com,1999:blog-8933321108111349285.post-28151987513892906952012-02-18T01:26:23.163-08:002012-02-18T01:26:23.163-08:00The Premium the Covered Call writer collects is wh...The Premium the Covered Call writer collects is what makes Covered Call investing very profitable over time. For instance, if you can write Covered Calls monthly and generate an average 10% monthly profit from the combination of the premium plus any additional profit you receive from being called out, you'll make a 120% yearly return on your investment (213% compounded)! This is much higher than any mutual fund returns. Mathematically, a $3,000 initial investment can balloon to $1,000,000 in just over 5 years if you average 10% monthly returns and don't add any more to your original $3,000 principal investment (other than reinvesting the 10% monthly profits).sell structured settlementhttp://settlement-cash-structured-for-flow.com/noreply@blogger.com