Money Tree Investing The Growing Popularity of Covered Call Option Strategy
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Jul 12, 2024 Barry Martin, who manages $1.3 billion in option strategies at Sheldon Capital Management, dives into the booming popularity of covered call options. He explains how this approach has grown significantly, catalyzed by lower commissions and increased educational resources. Barry highlights how covered calls excel in volatile markets and the importance of selecting strong stocks. He also addresses common misconceptions about the strategy's risks and promotes education as key to successful options trading. Tune in for insights into navigating today's market dynamics!
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Explosive Growth in Covered Calls
- Covered call writing surged from $7 billion to $75 billion recently due to lower commissions and better options education.
- Increased popularity also fueled by the meme stock craze and rising retail interest.
Covered Calls Suit Sideways Markets
- Covered calls perform best in choppy, sideways, slightly up or down markets.
- Low volatility and near-zero interest rates make covered call selling less beneficial.
Income Strategy with Covered Calls
- Use covered calls as an income strategy by selling calls above your target exit price.
- Repeatedly collect premium while waiting to sell the stock at a desired higher price.