Covered Calls

Covered Call

My first introduction into trading was by way of covered calls. Covered calls are an income strategy and typically promise a 2% or so return per month. This strategy involves buying a share (or even a CFD) and selling a call against it. Variations of this strategy include buying an option ITM and selling an option OTM at a higher strike both with the same expiry. Covered calls CAN work quite well in a market that is rising or going sideways but can present problems if a market is declining. In addition to buying stock and selling a call, some

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trading tools of the trade

Investopedia has an article here but it doesn’t seem terribly helpful to me. Here is a document I wrote when I was trying to come to grips with it and also what my software was showing me. Volatility I have been on something of a crusade to understand volatility and how it is calculated in my charting packages Optuma and Beyond Charts Plus. First Historical Volatility. This is the standard deviation of the % change in price for a specified period (sometimes called the Interday return). There are a few different ways this can be calculated. In Microsoft Excel, it

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Option Chain

Options can be very confusing for new traders however once you understand a few basics they are really quite straightforward. There are 2 types of options to be considered. A Call Option and a Put Option. If you BUY an option it gives you certain rights. If you BUY a call option, it gives you the RIGHT to buy the instrument at a fixed price on a given date in the future IF you wish to. There is no OBLIGATION on you to proceed with the purchase in the future. If you BUY a put option, it gives you the

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