Forbes suggests, “Volatile times can be disheartening for investors because their portfolios experienced large swings. However, these swings can be smoothed out by selling options in the form of covered calls”.
Where is the market headed and how can Covered Calls help?
Here is a graph that dates back to 1902. History has shown in the last century we had three different time periods of when the market had sharp movements higher and lower with minimal returns. Each period lasted for 17-25 years.
Nearly 60% of those in a recent Forbes survey said they had “lost faith” in the market. Obviously, most investors are frustrated and don’t know what to do. The Covered Call strategy we use, will help you generate more income and offer protection during these ugly markets.
What is Covered Calls?
Consider this analogy: Imagine that the Covered Call strategy is much like a home rental situation. You own a certain stock (the house) for which a perspective buyer pays you a fee (like rent). The prospective buyer has the option to buy the stock at a specified time in the future at an agreed upon price that is more than what you paid for the stock originally.
This unique strategy can be confusing if you do not have the expertise of how to use a Covered Call. At Kensington Financial Group, we have safely used this strategy for 25 years.
Contact Us today to learn more.