The Hidden Cost of Covered Call Writing

 

Covered call writing is touted as a conservative way to generate additional income from an equity portfolio while still allowing investors to participate in market appreciation and dampen downside risk and volatility. The purpose of this paper is to help investors make more informed decisions by better understanding the limitations and risks of covered call writing.

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"Over the long term, for investors that need cash, simply selling a portion of the principal of the equity would have created a much better investment outcome than covered call writing."

Shawn Gibson - Chief Investment Officer