Hi Richard,
Welcome to the forum! You presented a very sharp and astute
assessment of what is mathematically is taking place here.
(It also means that, in a market that's way above any
historical valuation ever, many of the people here are
making money by shorting puts. What fun! :) I usually skip
the covered call part though, and just sell a cash-secured
put, and only do it with stocks that I believe are way
undervalued.)
It's not that WINs advocates going after declining stocks
to simply write CCs. Rather, the CCing is part of a bigger
long term process of investing as the CCs provide you with
downside protection against capital depreciation. Yes,
without sideshows long PUTs, the position is neutral as you
indicated. That is ok. Typically, most folks panic and lose
oney at that point. They have no idea of what to expect
since they don't use technical indicators. It's all
emotional and subjective decisions.
You see, we are presenting a conservative total approach
for the novice to average investor. The money you protect
as the stock cycles downward is used to perhaps buy long
PUTs or to buy more stock to average down and repeat the
process. To make this all possible, we provided technical
chart indicators to assist with the timing of the CC writes,
entry into the stock, and exit.
In short, I don't know of any website other (than this
forum) out there that offers a total package of what to do,
how to, and why. Do you? We would like to tap your brain as
well. :-) |
