Hi SmartTrader,
Over the past few emails, I’ve been talking about why I would never, ever trade conventional covered call strategies.
The biggest reason is due to the risk of the stock dropping.
If that happens, you are toast on several levels.
The first thing that happens is that you can’t sell any more calls against your position.
That’s because the calls are so far OTM, they are worthless.
But then, if you make the mistake of selling a call that has more premium, you LOCK IN THE LOSS if the stock moves back up.
That’s a BIG NO NO.
So then, what do you do?
Simple…don’t put yourself in that kind of risk in the first place.
A recent CashFlow Covered Call position saw the stock drop 2,500.
A conventional covered call position would be losing 2,100 on this stock drop.
But my CashFlow Covered Callwas only down 466 on a 2,500 drop in the stock.
Creating a scenario where I didn’t have to wait for the stock to move back up 2,500 to potentially recoup the loss.
In fact, if the stock stayed down, I would be able to make up that loss in just a few days.
I’m probably getting a little more technical with this email than I should, but I cannot convey to you just how important this is.
It completely changes everything about covered calls.
That’s why you really should watch this video on my CashFlow Covered Call strategy RIGHT NOW.
WATCH THE VIDEO NOW BY CLICKING HERE.
Trade Smart, Retire Wealthy.
Ryan Jones
Founder, SmartTrading
P.s. This is the downfall of most so-called trading experts. Rather than dealing with the risks, they try to pretend they don’t exist. There are always risks.
And the trader who UNDERSTANDS the risks properly, can then properly manage and mitigate them.
That is what literally propels traders into successful trading.
Watch this video on my CashFlow Covered Call strategy and see what I mean.
