Additional Yield
We buy individual dividend-paying stocks, which naturally are less volatile than their non-dividend peers, and we sell call options to bring in additional income, this is known as a Covered Call. As time goes on these options lose value as they get closer to expiration, which is good for us the seller, and bad for the owner. This is especially true in the final 30-60 days before an option expires, which is the timeframe we tend to sell the options which allows us to capture a lot of time decay. This expertise and attention to the portfolio are extremely rare for a full-service financial advisor.
Calculated Hedging
Another way call options lose value, besides over time, is by the underlying stock price going down. When that happens the option becomes more out of the money and eventually becomes essentially worthless, even before expiration, and we are able to buy them back for pennies. This is why call options make good hedges when stocks experience moderate volatility. Usually, hedging is done by buying put options which can work well in extreme circumstances, but overtime is simply a drag on performance. Call option writing is more often boosting the overall return.
Risk-Adjusted Returns
By combining superior dividend investing with the consistent income stream of call option writing we have created a strategy that provides outstanding risk-adjusted returns for moderately aggressive investors. Most advisors cannot match this because they lack the expertise in options and/or simply use index strategies that only give average risk vs reward.