|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.