Buying a few different stocks to sell covered calls on can be a good thing or a bad thing. All basic principles of buying stocks still apply, so choose your positions carefully.
So what stocks are good candidates for covered calls?
1. Good long Term Plays
If you are going to sell covered calls it is important that you do it on stocks that you would not mind holding for a longer term time frame, because you might have to. These stocks should have good fundamentals and be companies that will last.
2. Cheap Stocks
Cheaper stocks can have a higher possible return when it comes to covered calls. If you sell a $2 call on a $50 stock it is only 4%. If you sell a $2 call on a $10 stock it is a 20% return. Just remember this isn’t the most important thing to look at. High quality stocks are better.
3. Stocks trending up or sideways
The last thing I would want to do is to buy a stock that is falling with the intension to sell calls on it. If a stock is going down it will most likely keep going down, why would you buy something like that. There is no use selling a $1 call on a stock if it goes down $5.
Any stock that I buy with the intention of doing a covered call I like to see it either starting to trend higher or at least trending sideways.
4. It Should have options
This goes without saying, but if you are going to sell a call on a stock it needs to be optionable. Not all stocks have options. If a stock does not have a lot of volume, it might not have options on it. There are a few other reasons a stock might not have options so it is worth it to look into that.
Like anything else in life, penny stock advice can be real good or
really bad. Learning how to invest in penny stocks to make big gains can
be a frustrating (and expensive) process. The learning curve can be
full of losses if you don’t know what you are doing.
These trades are among the most profitable opportunities in the stock market.
Because so many of these can be undervalued, it is common to see one
jump 50%, 100%, even 300% is a few days time. How to invest in penny
stocks is the tricky part.
You may have been through this scenario, when I began trading online, I realized that I needed a proven strategy to pick the winners. I came to this realization after watching
over one half of my trading account disappear by making bad trade
What was my biggest problem? I signed up for a bunch of
free newsletters offering stock advice. While their picks did usually
move up, they did so at the open and by the time I placed my order, the
stock was dropping like a rock. They call these free websites, stock
pump and dump sites.
They buy into a stock before the closing bell
and wait until after trading hours have passed to alert their members
of this hot stock pick. Many of the members pile in at the open the next
morning driving the price up, as the website owner dumps his stocks on
the members for a profit. As the buying frenzy slows, the stock
While I could see the opportunity in these undervalued stocks, I needed desperately
to learn (very quickly, I might add) how to invest in small cap stocks
for profits. I came across an article written about small stock research
These companies were set up with software programs that
specifically analyzed thousands of small cap stocks every day to find
the most likely ones set to go up in value. Their business is research
based without emotion.
Stock traders looking for legitimate penny
stock recommendations know that buying a membership subscription to
these quality stock research firms is really the only way to succeed
trading small caps. I joined two, and within the first week, I was
profiting on my trades. Within a month, I had replenished my trading
account to the full amount I had started with.
Now, I only trade penny stock advice from these paid subscriptions. When traders that ask
what my best investment has been, I tell them, “paying for penny stock
advice has been my best investment”.
Many people have begun to take a keen interest in penny stocks and
this is really something you need to take into account when you are
trying to get into the game of trading as fast as you can. Ahead of you
lie several roads you can take, and based on the current economic
crisis, you would probably want to get into markets with a good volume, activity, fluid and one that allows you to speculate from any channel.
Online trading has become one of the more popular ways to trade in the penny
stocks market and now, any one with a casual interest to make money can
actually hop on to the Forex market from the comfort of their own home.
Apart from the initial learning period which everyone has to undergo,
what you need to know is that you might just well be earning a steady
and sustained income just from a few hours of work. One of the main
benefits of the Forex market is that there is no geographical location
or trading floor which you have to contend with.
One of the down sides of markets with physical trading floors is that they are bound by
red tape and rules, and taxations specific to the country in which you
are trading in. This is why the Forex market is so popular, because it
moves from region to region, and all the trading can be done remotely
and online. This is why you need to consider as much as you can about
the Forex market, and also, you need to know that you can access their
account from any place on the world. This also means that they are able
to actually to trade in the currency pair of their choosing, in their
regional conditions from anywhere in the world and this is the great
advantage of the currency market.
Another good thing about the currency market is that it is a true over the
counter market that is also a zero sum game. This means that you would
be able to win, if you work hard enough. And this is what a market
should be. Granted that the currency market is subject to the same
degrees of volatility and unpredictability as any other market, it is a
much easier market to maneuver when you know what you are doing. The
benefits of penny stocks and trading is one that has been around for a
long time, and all you need to do is to actually find out more about the
There are plenty of sites that are out there
that allow you to find out as much as you can about the Forex market.
One of the things you need to know about is that the Forex market has a
wide support structure that allows you to actually come on with some
help. No longer will you be drowning in a market out there to eat you
alive, you will be in a market that gets you places and there are people
who will help you.