Uncovering The Risks Of Covered Calls And Cash Secured Puts
Selling these two options is a safer options strategy, but it still carries risks
While some investments are riskier than others, each investment vehicle carries its own risks. Not understanding the risks you’re playing with can lead to significant downside when things don’t go your way.
Covered calls and cash secured puts are often seen as ways to boost your income through the positions you already have in your account. In fact, you can crush dividend returns with the help of covered calls and cash secured puts.
I wrote an article detailing the math behind making 6-figures selling covered options which although has its merits, painted a very rosy picture of options trading.
While it painted possibilities, it didn’t clearly assess all of the risks. That’s the purpose of this article.
Some people see selling covered calls and cash secured puts as free money, but that is not the case.
