A "How To" Book Review: Writing Covered Calls - a Low-risk Cash Flow Money Machine

Investing in the stock market was once something that only the rich indulged in. But today, thanks to the invention of the Internet, the "average person" can easily and conveniently buy and sell stocks and do options trading from their home computer.

Most stock market traders look for stocks to invest in that they believe will go up in price over time. But, wouldn't it be nice if there was a way to make money on a stock if the price went up or just stayed the same? Wouldn't it be nice to have insurance so that should the stock price drop slightly, you would have some downside protection to reduce loss? And, wouldn't it be great to be able to buy a good quality stock for the long term, and while you were holding it waiting for capital appreciation over time, you could make extra income from it every month? Well, there is such a strategy, and it's easy to do. It's called "writing covered call options".

Options trading can be risky, as is true of any trading in the stock market. But the simple strategy of writing covered call options reduces the risk and puts the odds in your favor of making a profit. A stock price can go up, down or remain unchanged from the when you purchased it. When you "write a covered call" on a stock you own, you make money if the underlying stock price goes up and even if it goes sideways (remains unchanged). In fact, even if the price goes down a little, the money you receive from writing (selling) a covered call option will offset some or all of the drop in the stock price. And, you still own the stock, which may eventually recover or enable you to later write another covered call on it and "rent it out" again.

Covered call writing is a very interesting strategy, which can be done by the "novice" stock market investor who has a computer and an online brokerage account. With the aid of the book, "Covered Call Writing: A Low-risk Cash Flow Money Machine", anyone can quickly learn the basics of this simple technique.

"Covered Call Writing" is the most comprehensive and clearly written tutorial book on the subject. Priced at $49.00, it's an investment everyone should make before entering into the fascinating world of options trading. The book assumes the reader has little or no knowledge of option trading, and is an excellent tutorial resource for the beginner.

Writing covered calls is not a "get rich quick" scheme. It's a strategy that makes a little profit with each transaction, but does it over and over again, with accumulating results. The book says to "think like a mouse". A mouse smells a big, delicious slice of cheese, but it's on a mouse trap, loaded and poised to be sprung. If he tries to take the whole cheese, he will set off the trap and get killed. If, however, he just nibbles a little bit so as not to take too much, there's a good chance he will get away safely. He didn't get the whole cheese, but he successfully came away with a piece!

That's the concept of the book and the technique of writing covered call options - to use the safest form of option trading to generate money every month or two on our invested money, nibbling like a mouse, and not trying to do fancy or complicated trades.

"Covered Call Writing: A Low-risk Cash Flow Money Machine" is designed to target the "average" person, that is, anyone who has a limited amount of time and disposal capital available to trade with, and who is not a stock market "whiz". This is someone who desires to take control of their finances, and wants to learn more about investing and using their personal computer to trade at home on the Internet.

The book covers the basics of options trading with detailed step-by-step instructions on how to write covered calls. The benefits and risks are clearly stated, and chapters are included on how to increase your rate of return and contingency plans for what to do when the underlying stock drops in price.

You can put your money in a bank's Certificate of Deposit and earn 5% a year, or you can use the strategy of writing covered call options and make 5% in as little as one or two months! This book will get you on track to achieve these kids of returns.

"Covered Call Writing: A Low-risk Cash Flow Money Machine", by author Dan Keen, is published by Tradewins Publishing, and can be purchased on their Web site at www.tradewins.com.