Covered-Call Strategies Are Timely High-Yield Plays

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

As long as the U.S. economy is continuing to grow, and by nearly every measure, it looks that way, then, investors who are on the hunt for high-yield income should have some exposure to covered-call strategies.

The quest for big yield in many of the asset classes is turning up little, if anything, of value, and it shouldn’t be investors’ intentions to reach for yield. A well-executed covered-call strategy should deliver an annual yield of more than 10%.

Covered-Call Strategies Can Be Used with Stocks and ETFs

We’ve seen this formula work extremely well with stocks and exchange-traded funds (ETFs) that are taking full advantage of high-quality, bullish fund flows, while also capturing volatility in the form of elevated option premium. At present, I find this method of producing monthly income to be highly attractive.

Within my Quick Income Trader advisory service, I recommend various different stocks among all asset classes at prices that are technical buy points, per my investment screens and models. After purchasing the stock or ETF of choice, I recommend selling an out-of-the-money call option at a limit price that is higher than where the calls are currently trading.

Covered-Call Strategies Work When a Stock Rallies by 1-3% Before Calls are Sold

Hence, for the call option to be executed, the stock must rally by 1-3% before the calls are sold at the higher limit price. In doing so, we lock in some capital gains if the position is called away and our total return is much higher than if we sold the calls “at the money,” or where the stock currently trades. It also carries a much higher probability of being called away.

Ideally, we want to sell calls on our underlying positions about every three months, which generates up to four call premiums received per year. A lot goes into this methodology to have it work properly, but that’s my job. Quick Income Trader members simply follow my instructions and watch the income flow into their accounts.

Covered-Call Strategies Can Offer Timely Double-Digit-Percentage Yields

If making a double-digit-percentage yield on a stock portfolio piques any interest, then check out the tutorials and other information here. I urge investors to give this opportunity serious consideration and give your portfolios an immediate raise!

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