learning about trading covered calls with an objective and unemotional
mental state during the trading day. Understand how you trade and only
then will you ever have a real chance of truly understanding the
markets and make money.
Traders who set, and write down these trading plans, are more likely to
attain their personal, trading and financial goals than those that
just say they want to be a good trader. No matter what background
traders come from, you can make trading work. It is simply about using
what you have and learning to write and trade covered calls.
Buy Write Covered Call trading involves the simultaneous actions of
buying a stock and selling a call. The word Write implies option
selling, while the term Buy Write implies call option selling against
shares that are either borrowed or actually owned. Traders timing of
Covered Call selling, you can use several different technical chart
indicators that can be used.
The MACD Moving Average Convergence Divergence histogram indicator that
can be used when selling Covered Calls. MACD histogram is a tool that
can assist traders at picking the best point to sell the calls. A
strong underlying shows higher readings on the MACD histogram, while a
weaker underlying shows lower readings. As the MACD histogram
starts to decrease on the year daily chart for several days in a row,
you interpret those readings as the first sign of weakness. The
decreasing MACD histogram and observe that at the same time the
underlying price action is stalling and failing to move higher.
This signals that it's time to sell calls against the underlying stock.
Covered Calls can be a money making strategy for traders. The covered
call if it goes above the sold strike price either on or just before
expiry.
A Covered Call is less risky than just holding on to the stock. If the
stock declines in price, the premium is the cushion that can help
traders to handle the bumps on the up trending charts.
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