Example of How covered call strategy works
Let’s say Ray and Jill, an average couple decide to apply the covered call strategy for extra income. They want to put this selling covered call strategy into Action. They watch the “Getting started covered call dvd’s “ practise on paper, set up their share accounts with a small amount first to develop their confidence.
Now, Ray and Jill select a share that is a blue chip company – profitable and not currently overvalued.
THE FOLLOWING IS ONLY A EXAMPLE
Let’s say it is called TUV Share and it is just under $13.00 a share, say $12.95
They check out the rental premium (by following how to do it as covered in the Homestudy Videos) and realise they can get approximately $0.50 rental premium if they rent it out for say $13.00 for the month ahead. They calculate that they could buy 5,000 of TUV shares ($65,000 total) and make one simple phone call to the accredited brokers to rent them, and then receive 5,000 x $0.50.
That is $2,500 into their bank account for that month, deposited immediately!
They also realise that they could do this most months of the year. Plus they accept that if TUV goes up in price by the end of the month, and if it’s above the $13.00 price, then their shares will be sold for $13.00.
But you see, they realise this in advance, and they’re prepared for it. They know they will make not only the $0.50 but also $0.05 extra profit:
$12.95 buy price – $13.00 sell price = $0.05 profit
Total = $0.05 or $250 profit
Starting to see how powerful this share renting strategy is?
That is a 4.3 % return FOR A MONTH if we did this for a 4 week period
this stragity has 3 parts
- share renting (covered calls) = Low risk
- rent shares no capital = Medium risk
- writing insurance policy = High risk
