Many factors affect the outcomes of covered call investments — market movement, the choice of the Call option’s strike price and expiration date, the use of margin or not, and, most important, the specific stock chosen to invest in. If you want to lower your risk and increase your returns, the best way is to always invest in companies that you have examined and determined good long-term selections. If you only buy companies that you would be willing to hold for the long-term, you are then able to ride out any situations where your stock has declined in value after writing calls against it. All stocks move up and down in price and it is foolish to make an investment in a company that has poor fundamental characteristics.
At writecall.com you will find the best and smartest investment strategies. That said, it is not a get-rich-quick scheme. Some sites play a shell game by calculating the returns of a short-term investment into an annualized return. This practice is simply ludicrous. Your annual returns can not be calculated ahead of time. Some covered call transactions are closed out in three weeks. Others might take months before it works out that you exit your position with a profit. Why look at false, inflated numbers that do nothing to predict what your actual annual return on your investment capital will be?
The only way to calculate annualized returns is to look back over the previous year and see what the returns were!
With all that said, covered calls still present perhaps the best investment opportunities in today’s market. Diversification is a wise strategy, but you will more than likely find that your covered call account will end up producing multiple times that produced by your mutual fund accounts. Knowledge truly is power.