How to write covered calls for a monthly cash income

I can still remember that day like it was yesterday, the add in the paper read “Stockmarket millionaire reveals his secrets”. With an offer like that, how could an overworked underpaid wage slave like me pass it up!I thought to myself ” WOW a stockmarket millionaire was actually willing to teach me his secrets, how could I lose?”So I rang the toll free number, and the nice lady on the phone promptly zapped my credit card for the princely sum of $49. Four nights later I arrived at the venue, as did 57 other keen and enthusiastic people, who were also seeking the path to unlimited riches that the stockmarket was meant to offer. After a 3 hour presentation I was completely mesmerized, and I had to know more about these secret strategies that the presenter was using to make returns of over 100% per annum on his portfolio. As luck would have it, the stockmarket millionaire just happened to be running a three day stockmarket trading seminar where he revealed all of his inner most secrets. If I signed up there and then I was able to attend for the bargain price of $2995. With a deal like that how could I refuse, so once again out come the plastic. After attending the three day stockmarket trading seminar, I was brimming with confidence,

At long last I had the tools to pick Wall Streets pockets.

Armed with $2000, and the dream of becoming a full time options trader I opened a brokerage account and started trading. I can still remember the scary feeling in placing that first trade, I kept telling myself “this is real money now, so don’t screw it up”21 Days later I closed that trade out with a 127% profit, the profit from this trade was more than I made working for a month at my stinking job,

Oh boy, it was like I had just won the lottery!

After 4 months I had run my account up to $8,210, at this rate I would be able to quit my job at the end of the year, and just live on my trading profits.I’ll bet you can guess what happened next? Little did I know that there was a $7,797 trading lesson waiting around the corner, that had my name on it. The sinking feeling in the pit of my stomach made me sick, as I realized what had happened. How could I have nearly lost my entire trading account up on 2 trades that were such a sure thing? I was so upset I couldn’t even tell my wife. As it turns out my losses were inevitable, I was like countless other beginners, whose trading strategies only involved making money when the stockmarket went up and lost money when the stockmarket went down. This led me to the realisation that,

The Stockmarket gives all clueless beginners a beating at least once!

What was I to do now? There was no way I could afford to blow up another trading account. My thinking was, due to the fact that I had made some money, I must have had some skill, or was it purely beginners luck?Over the next six months, while I was planning my comeback, I sought out any information I could find about stock and options trading. After checking out loads of stockmarket newsletters (most of which were junk) I ended up with a free trial at a leading Daytrading chat room.I know what your thinking…”Daytrading that’s even riskier than options trading” But I was keen to give anything a go that would give me the key to unlocking the mystery of the stockmarket. The 10 months that I spent daytrading was absolutely Invaluable. I got to witness some pretty amazing sights, things like the big guns driving down out of favour stocks, only to buy them cheap and run the price up again, I also noticed that the stockmarket usually behaves a certain way at different times throughout the day.

                                            Had I finally cracked Wall Streets secret?

I had even worked out why I was a failure as an options trader, things were looking up.However, trading the stockmarket in the middle of the night soon became a real drag, the thrill of getting up at 1:00 in the morning (NZ time) to sit for 7 hours in front of a computer, had truly run it’s course. There must have been a better way where I could profit without having to constantly monitor the markets. After countless hours of research I stumbled across something so simple I couldn’t believe I had never heard of it before. More about my discovery in a moment. Look, I don’t know your reasons for wanting to get into the stockmarket. For me it was a no brainer, I wanted the freedom to spend more time with my family, and be able to make a nice living from anywhere in the world. To me the stockmarket is the ultimate business, one that has no employees, no premises, no expensive equipment, and best of all no whinging customers, how many business owners that you know of would absolutely love a business like this? There are other benefits to the stockmarket such as:

You don’t need a huge amount of money to start with: You can start trading with as little as $3,000.

The time spent to trade is minimal: You can get away with spending as little as 4 hours per week on your trading.

You can get your money back instantly: You can convert your trades to cash within minutes, try doing the same with an investment property you no longer want.

Anyone can learn how to profit from the stockmarket: You don’t need to posses special trading genes, It doesn’t matter if you are young old, man or woman.

However, let’s get real for a second,I want you to know it’s virtually impossible for beginners to make any money from the stockmarket without the right knowledge. On the other hand with accurate practical information applied correctly the stockmarket can reward you financially. Anyway, by now you are probably asking yourself, why should you listen to me? Actually the answer is quite simple, Six years ago I was exactly in the same position that you are now. Despite encountering a couple of financial disasters along the way, I was able to survive, and as a result I discovered,

          To survive in the stockmarket you must use Non Directional trading techniques

Let me explain what I mean, Non directional trading techniques, are simply the use of trading strategies that produce positive returns, no matter which way the stockmarket moves.Imagine being able to make a return of 4% in a month on a stock that doesn’t even move a cent in price. But better still you can make a positive return on stocks that go down as well as up. Sounds too good to be true, rest assured it’s for real.

                                        How does this investment technique work then?

Just about everybody is familiar with buying propert as an investments and renting it out for a  return while waiting as the property grows in value. But the majority of stock investors don’t know that they can also receive rent from their stocks as well. by selling a call option against those stocks that the investor owns, they create what is known as a covered call.

Call Options are perhaps one of the most versatile ways to trade stocks ever invented, yet most people have never heard of them. A call option is merely, just the right but not the obligation to buy or sell a parcel of shares at a predetermined price until a predefined date. A call option derives it’s value from the underlying stock price that it follows, call options have expiry dates from 1 month to as far out as 39 months. Believe it or not most investors are unaware that call options can be used to minimize or even eliminate risk in a stock portfolio.

A vast majority of options trades are carried out by speculators trying to bet on the future direction of the markets, the speculators use options to try and leverage their returns, as options are much cheaper to buy than stocks. Because of their leverage there is a general consensus among the investing public that options are risky.

However I am talking about becoming an option writer (seller). Option writers are the people who sell option contracts to the speculative traders. The covered call technique has nothing to do with speculative trading, infact correct use of the covered call technique will allow you to make a consistent income from your stock portfolio.

Covered call writing is considered one of the most conservative and safest trading strategies available. Infact covered call writing is the only option strategy the U.S. government will allow you to do in retirement accounts (IRA,401k, etc.)