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We are here to provide you with the knowledge and tools that will help you achieve what you really want — more time, more money, and more options. If you want wealth, you must make your money compound. Money makes money. And perhaps no other strategy is better suited for consistently turning returns into compound investments than writing covered calls. How do we do it? Copied below is a step-by-step example...
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How Writecall Works
Writecall's system is built around covered call alerts, analysis and training. Whether you are new to the concepts surrounding stocks and options or you are an experienced trader, our training section will help you maximize profits and maintain long-term growth.
When you feel ready to invest in a covered call opporturnity, the first step will be to use our ReturnAlert service. |
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Step 1: Real-Time Alerts
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The following example was taken from a real alert and shows how you might implement our service with your investment strategies. Writecall's alert service uses email and the Web to notify you in real-time when a high-yield, short-term covered call opportunity is available.
The image below is from one of our alerts — you will see that it breaks down stock and option data for the company Atherogenics, Inc. (ticker: AGIX). Below the stock ticker and listing for the stock's price at 23.22 are three sets of option quotes. These sets are pairs of options based on the nearest month available.
This alerts was issued in late September, so for the October options the alert shows an OCT 22.50 option and an OCT 25.00 option. Those prices are the option strike prices and represent the price that your stock would end up being sold for if the holder of covered call options you sold were to exercise his right to buy your stock. So in this case, the alert shows that there are people out there who are willing to pay you 5.30 to have the right to buy AGIX stock at 22.50, and have that right until the options expire on the third Friday in October (all options expire on the third Friday of the month they are set for).
Examine the alert and then read on below for more explanation how this works. It can be a little confusing at first and then it will all make perfect sense. Stick with it. It's worth it! |
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The alert shows that if you bought AGIX at 23.22 and then sold the October 22.50 Call options, you would make a return of 5.30. Since the stock's price (23.22) is higher than that option's strike price (22.50) the odds are that the stock will end up being called out, or sold, at the option's 22.50 strike price. That is why on the alert you see that the 19.7% return is listed in bold type. The bold percentage values represent the more likely rate of return you would make for if your stock were to be called out or not.
If you pay 23.22 and then are called out and sell your stock at 22.50, you would lose 0.77 on your stock, but you will have gained 5.30 by selling the option. That's a net of 4.53 or 19.7%! If however, your stock were to fall and stay below the 22.50 strike price, you would not end up having it called out and you will have made 5.30 on a 23.22 investment for a net of 22.8%.
And what makes covered calls so fabulous is that you can calculate these return values before you have invested a dime! The numbers don't lie. At any given moment there are stocks which have call options selling at a very high proportional rate. Our alert system scans thousands of stocks and runs the numbers for you, but you can do it yourself by simply going to any quote service such as Yahoo! Finance or MSN Money. You will find that people are willing to pay from 1% to 20% to buy short-term call options on stocks.
What our service does is find those opportunities for you. Then, you can use our award-winning analysis tool to quickly determine which alerted stocks are what you would want to make an investment in. |
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| Step 2: Stock Analysis Using InvestLaunch |
| Once our alert has shown you that the stock AGIX is currently producing high potential returns on its call options, the next thing to do is to do a quick assessment of the company. To do this, click the "InvestLaunch" link on the alert and you will be taken to our powerful analysis tool. |
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First choose the stock on which you want to place your focus (Atherogenics in this example).
You will see that "AGIX" becomes displayed in the white focus box. With that now selected you can choose from any of our research affiliates to have a research window open with data on the AGIX stock. Everything from company reports to analyst recommendations to charts is available. Through MSN Money you'll even find a research wizard that will guide you step-by-step through the breakdown of AGIX's viability as an investment.
Rely On Your Own Assessment
With this tool, a quality analysis can be done in a matter of minutes. And if you're new to all of this, don't fret. With a little time and focused learning you'll never again need to rely on the "expert advise" of other people. Many so-called experts are just people who have research tools available. With InvestLaunch and our affiliation with MSN Money, CBS MarketWatch, Yahoo! Finance, Zacks Research, and BigCharts, you have at your disposal a truly powerful and easy-to-use array of research sources.
Other Tool Features
Beyond alerted stocks, you can enter your own stock ticker symbols for analysis; you can view alert data directly from the tool; and you can click the calculator icon to switch to a fully-featured covered call calculator. |
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| Step 3: Make The Trade |
If AGIX qualifies for your investment, the next step is to log into your broker's Web site or give them a call. First, buy AGIX. In our real-life example below you will see that we bought 200 shares at 23.46. Once your broker's site has confirmed the sale, you can immediately run the covered call transaction.
We then sold two contracts of AGIX October 22.50 call options (ticker: AUBJX) for 5.50 each. Three weeks later our AGIX stock was called out at the 22.50 strike price when the options expired. Our net profit was 4.54 per share or 19%!
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Learning how to write covered calls is a tremendous way to dramatically increase your portfolio's value. No strategy is perfect in all contexts and all market conditions. But few other methods of trading consistently yield such high, compounding returns as covered call writing. Plus, it is considered a conservative strategy. It is so conservative that the government allows the technique to be used in IRAs, 401k plans, and other low-risk, sheltered investment plans. When you buy a stock and sell a covered call against it, you will know exactly what the monthly return on that investment will be before you actually buy the stock.
Sign up today. Or, take our service tour if you would like to explore our service further.
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Stock and option investing contains risk and not all investments will produce a profitable outcome. Writecall is an educational service with alerts based on a statistical analysis and does not offer recommendations or advice for individual stock or option investments. Please consult with your stock broker or financial advisor.
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