Mon. March 7, 2022. How our fearless, intrepid investor made out last week and her plans for today

Our fearless, intrepid investor lost $65,700 in  2021, writing (selling) covered calls on Novavax (NVAX) in her “fun” portfolio. She is in good company. Over the last three years, fund companies have launched over 120 exchange – traded funds (ETFs) that sell covered calls.

In raising markets such as we have had now had for longer than ever before, selling covered calls underperforms.

The chart above compares the S&P 500 to SVOL (Simplify Volatility Premium ETF), an exchange-traded fund selling covered calls. Like all the others similar to it, SVOL is run by the best trained money managers using the best tools available. These managers, meaning Wall Street and Bay Street, make the money. The investors sleep like babies, meaning they stay up all night and cry.

Why is that?

In raising markets, investors who have sold covered calls are assigned and need to sell the underlying security at its strike price, which is below market price. They’re unable to benefit from the growth of the underlying security.

Attempting to outperform the market, “fun” portfolios ignore one or more of the six habits promoted by the Monday Morning Program. They are not much fun most of the time; they underperform the market.

Every investment mistake, past or future, was or will be the result of departing from one or more of the six habits of the Monday Morning Program.

Sophisticated investors do sell covered calls and cash-secured naked puts.