What-Crops-to-Grow

North Forty Crop

The Covered Calls Farm

(coveredcallsfarm.com &

Coveredcallsclub.com)

Planting and Harvesting Covered Calls for Fun and Profit using a Farming Strategy

North Forty Crops

This crop consists of many mid term calls in the 5-7 months range. The ideal target is to achieve a 15% actual return. If a farmer is able to plant this type of crop twice each year they should be able to achieve around a 30% annual return. As we know, premiums are impacted by a lot of factors and particularly volatility of the overall market and each stock.

At times premiums can drop into the 10 -12 % range or even lower for many 6 months calls. So while the 15% actual target is a goal the market will dictate the

premiums throughout the year. Thus, for example writing a 12% call around 5-6 months is certainly acceptable if it is the best available and the stock meets your expectations.

Writing longer calls for some farmers is not desirable because they may seem boring and not enough action. The Back Forty Crops of shorter cycle calls can be more exciting since it will seem like something is happening frequently (expire or assigned). However, once you start establishing a number of 6 months type calls over time there will eventually come a point where something is expiring or assigned each month. Just takes longer.

One of the primary benefits of the longer calls is some downside protection. 15% is certainly better then

1-2% if the market takes a hit. Still recognize that if we get another major fall like in early 2009 the 15% downside can be breached quickly and you will need to consider action to protect your account.

More to come later.. Ron

Please Note: This site does not recommend any specific investments. Please consult with a certified financial planner or brokerage to discuss specific investments. This is not a site for profit but an educational site for a specific call option strategy that is well documented but doesn't seem to be fully understood.