Suggest good stock for playing covered call

#1
Hi, I have a portfolio (midcap + small cap) of around 5.5 lac which gave me a profit of just 40% in last 5 years.
In this bull run most of my script are once again in green.

I have been playing covered call buying future regularly but the strategy is not always safe.

now i want to sell full portfolio and reinvest in a single large cap dividend yielding stock and play covered call strategy safely.
please suggest some suitable stock for the same.
 
#2
Hi, I have a portfolio (midcap + small cap) of around 5.5 lac which gave me a profit of just 40% in last 5 years.
In this bull run most of my script are once again in green.

I have been playing covered call buying future regularly but the strategy is not always safe.

now i want to sell full portfolio and reinvest in a single large cap dividend yielding stock and play covered call strategy safely.
please suggest some suitable stock for the same.
Consider TCS as for 2015 the company management is very confident of posting better results than they posted in 2014. I expect the current uptrend to continue for few more years.

But in downtrending markets , the covered call is a loosing strategy which you must have already experienced.

Smart_trade
 
#4
Sticking to bearish or bullish trends in forex is very risky because of volatility. It is wise to keep medium or short-term trading being constantly on alert with market movement.
 

mmca2006

Active Member
#5
Consider TCS as for 2015 the company management is very confident of posting better results than they posted in 2014. I expect the current uptrend to continue for few more years.

But in downtrending markets , the covered call is a loosing strategy which you must have already experienced.

Smart_trade
"But in downtrending markets , the covered call is a loosing strategy...................".
But ST ,if I don't want to sell the stock and want to roll down call selling-- is it still loosing strategy:confused:. For eg. I have 500 infy and i want to keep it at least for 20 years till my son completes his studies and Now Infy is 3316, I am selling 3350 call , if it goes down 50 points I will cover 3350 and sell 3300...this way I can carry on. I donot prefer to buy put option ---I just want your view and of other seasoned option traders because practically I am doing it and I want to know the deficiency of the system.:)
 
#9
"But in downtrending markets , the covered call is a loosing strategy...................".
But ST ,if I don't want to sell the stock and want to roll down call selling-- is it still loosing strategy:confused:. For eg. I have 500 infy and i want to keep it at least for 20 years till my son completes his studies and Now Infy is 3316, I am selling 3350 call , if it goes down 50 points I will cover 3350 and sell 3300...this way I can carry on. I donot prefer to buy put option ---I just want your view and of other seasoned option traders because practically I am doing it and I want to know the deficiency of the system.:)
First of all todays markets and businesses are changing so fast that idea of holding for 20 years is not a good idea...the company which is a leader today may be a laggard 10 years from now. 20 Yrs back Century and Baroda Rayon were bluest of bluechips...but see where they are today....

Now coming to your strategy....suppose Infosis for some reason goes on drifting down and finally becomes 1000 in next 10 years...then you would gain very little by way of premiums in call writing but value of your investment is eroded considerably.....and when you are playing this covered call at say 3300 , you will get packed when it becomes 2700 or 2500 as you wont like to sell a 2600 call that time as it your stock may go from your hands with prices very much below your purchase price...so the investment value goes down , your income by selling call premiums stops and you keep holding the loosing trade....I have gone through it ...think about it...

Smart_ trade
 

amitrandive

Well-Known Member
#10
First of all todays markets and businesses are changing so fast that idea of holding for 20 years is not a good idea...the company which is a leader today may be a laggard 10 years from now. 20 Yrs back Century and Baroda Rayon were bluest of bluechips...but see where they are today....

Now coming to your strategy....suppose Infosis for some reason goes on drifting down and finally becomes 1000 in next 10 years...then you would gain very little by way of premiums in call writing but value of your investment is eroded considerably.....and when you are playing this covered call at say 3300 , you will get packed when it becomes 2700 or 2500 as you wont like to sell a 2600 call that time as it your stock may go from your hands with prices very much below your purchase price...so the investment value goes down , your income by selling call premiums stops and you keep holding the loosing trade....I have gone through it ...think about it...

Smart_ trade
ST Sir
You are quite right about this.There is no way in the world you can hold something for 20 years.In that time span a company may also go bust.

If you are risk taker go in for short term positions in stocks with strict stop losses.

One strategy will not work perfectly for all times in the markets.Change is inevitable.
 

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