Dear covered call sellers,
I know why you do it. The premium hits every month & it feels like a second paycheck.
Here's what I need you to look at...
You bought that company because you think it goes up. Then you sold the "up."
Your premium is a few hundred bucks. The move you sold might be 40%.
& on the way down? That premium covers almost nothing. You eat the whole drop.
So you kept all the downside & sold the upside. For pennies.
The strategy isn't income. It's a fee you pay to feel busy...
If you want to get paid on positions you're bullish on, sell 1+ year portfolio secured puts & call it a day. This is one of the only option strategies Warren Buffett does... There's a reason.