$7,351 Free In Half Year With Covered Calls
Highly profitable options strategy, for everyone
A very profitable strategy that we use in Asymmetric Finance is Covered Calls. It is to sell a CALL option on a product that you have in your portfolio. Today we will discuss in detail all the money we have earned with this type of strategy throughout the year and why we believe every investor should use it.
You have your portfolio protected.
This sale allows you to cover a purchase, of an asset you want, in any scenario:
Rise in the price of the underlying: In the event of a rise in the price of the underlying asset, the long part of your portfolio will increase in value. Important: we mustn’t have an excessive number of Covered Calls since this could play against us.
We would be more exposed to a short position, which is not what we are looking for.
Underlying price remains unchanged: In case the underlying does not move, and its price remains "flat", we will take the premium of the options, and it will be a dividend that we will have earned by "doing nothing".
Price of the underlying falls: this is the best scenario. A product that we want to have in our portfolio is falling. For example, if you buy an index, and you know that in the long term, you will obtain an average return of 7%. However, there will be periods of lower or even negative returns. This strategy allows you not to lose so much money in this type of situation.
Why it is profitable in the long term
I will explain it so that everyone can understand it. Systematically selling options, mainly PUTs on indices, is very profitable since you are betting against development and progress.
When you buy an index, you buy the best companies by capitalization. This implies that when you sell a PUT on an index, you are getting long the top companies worldwide.
It may be that during a period of one year (or more), the index is in recession and your sold PUTs lose money. But if you perform this strategy on a recurring basis, you can make lots of money.
Beware of black swans
In the previous case, there is a very important factor to take into account it is the black swans. When we expose ourselves to options, we expose ourselves to a leveraged product. Extreme market situations can force us to sell our positions if we do not know how to manage risk properly.
Anyone in the financial sector who removes outliers from their analysis knows nothing about market behavior.
At Asymmetric Finance, we are very aware of these outliers. We know they will come sooner or later. That is why we use Covered Calls together with Long leveraged positions and, what is our diamond, very OTM PUT options so that when a black swan arrives, we can benefit as never before.
How much money have we earned in the first half of 2022
Below we will show you the exact breakdown of all the money we made in 2022. This is a 5% increase in return for not doing much, just buying and selling systematically.