Income Generator

K

kalyanisalem

Well-Known Member
#1
#1
Hi Friends,

I need ur valuable advice in this stragegy.

I am in a process of creating a method to get good income per month.

it is so simple. Example if capital is 1 .25 lakh..

split ur capital as 65% for buying stocks and remaning for selling call option of that stock.

E.x here i took infosys as a example.

on jan 1st 2010 i bought 20 shares of infy around 2600.52000+brkg

we will keep it till my target 4000 achieved(too high i know this is for very long term)

in Every month we will se11 the one call option and keep it till expiry
Here for january i sold 2750 call option at 26.

for each month we will calculate the strike price as(last close +150) here 2600+150=2750 make it appro to near strike price available.

it will continue for every month till i reach my target.

I need ur advice and suggestions for this how to tweak it further..

Stocks in my mind for this INFY, RELIANCE.. pls tell some more stocks...

I hope u will help in this process.

As per paper trading in this method from JAn 1 to till date 6 rs profit in stocks and 33 rs per lot in options( all these total for 5 month)

6* 20 =120
33*200=6600

pls advice me..
 
DanPickUp

DanPickUp

Well-Known Member
#2
#2
kalyanisalem said:
Hi Friends,

I need ur valuable advice in this stragegy.

I am in a process of creating a method to get good income per month.

it is so simple. Example if capital is 1 .25 lakh..

split ur capital as 65% for buying stocks and remaning for selling call option of that stock.

E.x here i took infosys as a example.

on jan 1st 2010 i bought 20 shares of infy around 2600.52000+brkg

we will keep it till my target 4000 achieved(too high i know this is for very long term)

in Every month we will se11 the one call option and keep it till expiry
Here for january i sold 2750 call option at 26.

for each month we will calculate the strike price as(last close +150) here 2600+150=2750 make it appro to near strike price available.

it will continue for every month till i reach my target.

I need ur advice and suggestions for this how to tweak it further..

Stocks in my mind for this INFY, RELIANCE.. pls tell some more stocks...

I hope u will help in this process.

As per paper trading in this method from JAn 1 to till date 6 rs profit in stocks and 33 rs per lot in options( all these total for 5 month)

6* 20 =120
33*200=6600

pls advice me..
Click to expand...
Hi

As you say : It is so simple :

'''it is so simple. Example if capital is 1 .25 lakh split Ur capital as 65% for buying stocks and renaming for selling call option of that stock'''

So we talk about a covered call.

Why not mention that to make it clear for every body ?

http://www.investopedia.com/articles/optioninvestor/08/covered-call.asp

http://www.investopedia.com/articles/optioninvestor/06/InTheMoneyCallWrite.asp

Take care

DanPickUp
 
Last edited:
T

timtim

New Member
#3
#3
The risk is if your stock goes rapidly down say 25 to 30% you will loose a lot
Else if it gains rapidly you will only make the premium
 
O

optionguru

New Member
#5
#5
Covered calls are brave hear strategy as

1. You need to understand which stock to invest in
2. You need to chose which call to write
3. Active risk management

My 3 paise on it ;)

You can chose bullish stock , but if its too bullish why write call ?
You need to carefully chose the call , is it overpriced /underpriced etc .. ? what is the vol of the call
Covered calls gives negative gamma so to rehedge u will deffinately loose money , is it worth it ?

Cheers
 
V

VaibhavPRO

Well-Known Member
#6
#6
It is always better to write in pair.
So i suggest u sell both 2750 ca and 2450 put.

An easy strategy to manage risk now is to square off one of the leg if its price reaches the total premium collected and keep other leg till expiry.
 
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