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Strategies & Market Trends : Option Strategies

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From: randpaul5/29/2017 9:08:57 PM
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I would like to create a monthly income stream by selling covered calls. I am not worried about a decline in stock prices and would like to hold onto my stock and continue to sell covered calls against it even on a stock price decline. If I hold onto the stock as it declines I understand I would lose capital but I would still keep the same number of shares enabling me to continue getting monthly income selling covered calls against the stock. I believe if I do not sell the stock I could maintain the income without realizing any actual losses since I never intend to sell the stock. My plan would include buying only blue chip low volatility dividend stocks. Please instruct me whether this makes any sense.

My other concern is if the share price were to fall from $90 per share to $60 per share and I continued selling covered calls against the stock I would realize an actual loss if the stock were called away at a strike price of $65. This would result in a $25 loss. My plan here would be to replace the called away stock as quickly as possible before it appreciated very much and I again would have the same number of shares to sell covered calls against. If the stock increased to $66 per share I would still buy it back and take the small loss.

I have tried to use technical analysis over the years to predict price action including candlestick analysis, RSI, Stochastics, MAC-D, Moving Averages, Support and Resistance without success and would like to get into something that would offer some small income without all the risk. Your help would be greatly appreciated.
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