Theory of financial planning is usually the best. They are the development of digital and almost always ignore the emotional challenge, must follow the program. In reality, it can be difficult to increase the index of major market shares of ownership, the market has set up a new record high. It is hard for many investors to buy stocks, declining average market.
We believe in long-term work plan, but need to try to minimize risk in a bull market and bear market. A simple strategy, a typical, balanced portfolio risk can be reduced, in the long run, for investors to beat the market.
Many financial asset allocation plans to use simple rules, 60% 60% of the stock/bond portfolio of popular. Rebalancing may each year, the new funds, often additional monthly or yearly. Through the use of options, they add a long-term investment account money, investors can see the tangible benefits.
Now, an all-time high of stock market, many investors have retirement account contributions each year. Now have a plan for investment should consider selling calls, they added, it will effectively reduce their purchase of the price paid, they are against position.
Covered call options are generally considered to be a conservative strategy. When you write a call option on your own stocks or ETF, the position of the cover, the risk is limited. If prices fall, you will suffer losses, however, but sales of options to reduce the loss. If prices rise, you will get guaranteed profits and cash, this will allow you to open a new position.
Covered by the call to allow in many retirement account, but you should check your broker, decided to implement this strategy, in order to understand their specific policies and costs.
The chart below shows how to use a simple trading strategy decided what to buy. Best buy shares or ETF provides market beating results of history. This chart shows small-cap stocks lead the market, the strongest groups, they should buy.
The above chart compares the rate (ROC) of 26 weeks SPDR S&P 500 (SPY), iShares iShares S&P midcap core ETF (IJH), and the iShares iShares nuclear S&P small cap ETF (IJR). Small cap is now a leading, which let them buy.
In the future more detailed diagram shows IJR.
Small caps are generally considered more speculative than large-cap stocks, to a wider market and small capital letters go beyond the fact that now is bullish. Even if there are some bullish stock index, there is no need to ignore the risk. Buy the IJR and sales of the location of the call option, awareness of the market risk, is to reduce the risk of a step.
Each option contracts is 100 shares, so you can sell your own 100 shares each covered call options. IJR if you buy 100 shares, you can sell a call option, for those shares. Can call attractive price $90, let us through mathematics.
IJR sales $87.06 a share, so at the time of writing this article, the shares will cost $8706, 100. Call may expire, strike price of $90 trading around $0.55, so selling a contract, will create a direct income of $55. Open the location of the total cost is $8651.
If the IJR trading below $90 option, due in May, you will keep the premium, and 0.6% of the profit, holding period for seven weeks. This trade can be repeated seven times, provides a potential revenue growth rate of 4.2%. A dividend yield of 1.5% IJR, you may get 5.7% of annual income, dividends remain the same.
If the IJR is trading above $90 in mid-may, you have to sell $90 of shares, and make a profit of 4%, more than seven weeks.
If you are planning to buy shares, now, can consider to increase a covered call position, your portfolio, in order to reduce the risk, and generate revenue immediately.
 



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