Covered Call Boot Camp
What's the Catch?
When I tell people they can make 12% to 20% per year or even more by taking less risk than owning stocks outright, often the first reaction is that it seems there must be a catch. Well, there is a catch, and you may have already recognized it. But you’ll probably agree that the catch is a very palatable one.
As I mentioned earlier, by using our strategy, you’re giving up the theoretically infinite upside return on your stocks. You may miss that once-in-a-blue-moon home run. But in return, for giving up that fantasy, you greatly increase the probability of consistently getting the more realistic near-term return you’ve targeted. If you’re more of a pragmatic person than a dreamer (and being practical and rational is how you accumulated your nest egg, isn’t it?) this is the kind of trade-off you’re very willing to make to protect your capital and grow your wealth safely.
There is one other small "catch." In order to optimize your return, you have to keep your commissions to a minimum. On the less profitable (but safer) trades, you often have to take a position in the stock worth $5000 or more. On higher profit trades this is less critical, and you can do well with positions as low as $2,000. Generally, if you’re going to have a diversified option portfolio, you should probably be starting with $50,000 or more in investable capital.
Next: Their Ignorance Makes Money For You
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