For a start, my covered call plays for 2007 are against the following stocks:
CSCO
INTC
HPQ
NVDA
DELL
STLD
Traditional thinking is that the Covered Call Strategy works best for bullish to neutral stocks. Yes, this is not wrong. However, since my intend is to derive regular income from my "Assets or Stocks" i.e to lock in a MONTHLY return of 3%-6% return on my stock investments, then it should not matter as much which direction the market is going. Think of it as having a property where you are perpectually renting out to collect monthly income....and during which, the value of your property may go up or down & you are not unduly worried. The only thing you don't want is the property to be swallowed by an Earthquake or be swept away by a Tornado & in which case, you have nothing to rent out against. In the case of covered calls, as long as the stock value is not zero and the company is still fundamentally sound, we can continue to "collect" rental income MONTHLY. But having said that, of course I still like the company to remain bullish in the long run so that we can have additional capital gains. Therefore stock selection is still important in this strategy. In fact, selecting fundamantally sound stocks with options premium that meet my 3%-6% monthly return criteria & when to "Sell to Open" & "Buy to Close" the options to maximise on the returns determines the success with the application of the Covered Call Strategy .
DO NOTE:The cash return are represented by real cash & not paper values that can disappear as quickly as they appear. These cash returns can be reinvested to dramatically compound the growth of a portfolio or be withdrawn & spent on whatever you desire.
