Diversify With Covered Calls on ETFs

Proper diversification is the key to long-term investment survival. The goal is
to have non-correlated investments across asset classes, industry sectors,
geographies, and time horizons. Covered call options are a good strategy because
they can help you lower risk and increase yield on your well-diversified
portfolio. Options trading investors can invest in stocks or exchange-traded
funds (ETFs) that track real estate, commodities, interest rates, industry
sectors, geographies, and more. By writing calls against those investments you
collect time premium on the whole lot as time passes. Diversification via ETFs
is a good strategy for smaller accounts because you can buy an ETF that is
itself diversified, and then write calls against it for income. Examples include
the iShares Russell 2000 Index (NYSE: IWM ), or the SPDR S&P 500 ETF (NYSE: SPY
). How much diversification should you have? There are two schools of thought on
this: On the one hand if you are perfectly diversified your returns will likely
be average; on the other hand concentrated positions can work for or against you
depending on your stock and asset picking skills. Find more option analysis and
trading ideas at Options Trading Strategies . More diversification is better
than less for the average investor. While momentum investing can be fun, once
that party reverses course youll be lucky to see it coming and get out while you
still have a profit. Remember the tortoise and the hare? If you think you just
cant stand to have a boring portfolio, especially when everybody around you is
talking about todays hot thing, just remember the tortoise. Hes the guy with the
low-volatility, fully diversified portfolio who avoids unpleasant surprises and
eventually wins the race. Born To Sell  Covered Call Favorites The Top 4
covered calls that Born To Sell members have written with three weeks to go til
April expiration (in order of popularity): Rank Company Strike 1 TIVO (NASDAQ:
TIVO ) 9 2 JDS Uniphase (NASDAQ: JDSU ) 20 3 Microsoft (NASDAQ: MSFT ) 26 4
Freeport-McMoRan (NYSE: FCX ) 55 Mike Scanlin operates Born To Sell , a web site
dedicated to helping people earn monthly income from selling call options.