Welcome to Extreme Investor Network, where we provide valuable insights and unique information to help you make the most of your investments. Today, we are going to discuss how to take advantage of rising options premiums by using a covered call options strategy.
One stock that has been delivering impressive returns so far this year is Domino’s Pizza, with gains exceeding 20%. Despite recent market concerns, including higher inflation rates and geopolitical tensions, there are opportunities to generate income through strategic options trading.
Warren Buffett famously said, “Be greedy when others are fearful,” and while the recent market volatility may have some investors hesitant, it also presents opportunities. The CBOE Volatility Index (VIX) hit its highest weekly close of the year, indicating heightened market volatility. However, the VIX level of 17.3 is not significantly elevated compared to historical averages.
For investors looking to capitalize on higher options premiums, selling covered calls on overvalued stocks or cash-covered puts on undervalued stocks could be a profitable strategy. Domino’s Pizza, for example, has seen significant price appreciation in recent months but may experience a slowdown in growth. By selling a covered call option, investors can generate additional income while still participating in potential stock gains.
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