Last Updated on 9 January 2021 by F.R.Costa
With summer approaching, it is time to expect nothing from markets. Article originally published at Master Investor Magazine August 2020 Issue 65.
At a time of light trading, a covered call strategy may be useful for generating profits in a flat market, providing higher returns with lower risk than the underlying investment without the option part would provide.
With a traditionally light trading month on the horizon and US markets having already recovered from the virus sell-off, investors are looking for clues to choose a direction, which most likely won’t come soon. Markets will likely move sideways during the next month or two. In anticipation, what we really need is to unfold a sideways strategy with an eye on downside protection. One just never knows…
For those looking for an off-the-shelf solution, there are many covered call ETFs in the market. They do the hard work for investors.