Why I'm Selling Covered Calls

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Keynes's picture
User offline. Last seen 6 years 11 weeks ago. Offline
Joined: 02/27/2009

So I've addressed elsewhere my ambivalence about covered calls vs. selling puts, however I'd like to discuss the broad reasons why I think this is a wise approach. Generally my macro thinking is that certain things are undervalued, but in the short term I have no idea what's going to happen. As such I like to either take a discount on my stock (if I don't get called out), or make a return that's sure to outperform a CD if I do get called out. I don't fear these issues running away on the plus side for a while, so even if one of my issues gets away from me, I feel confident it will come back, and I'll pocked my 5-10% in the meantime. (That's usually where I price the call). Thoughts?