Many people looking
for worthy investment ventures are often hesitant of putting their hard earned
money in the stock market. One of the reasons behind this is because of the
different myths and rumors surrounding this particular financial market. This
is a sad fact, as the stock market is actually one of the best avenues for an
individual to accumulate substantial financial resources. This is especially
true if an individual knows the best covered
call strategy to use, such as utilizing the most reliable covered calls
screeners.
Before we get into
detail of how individuals can improve their covered calling strategies, let us
first delve into what the most common myths surround the stock market.
Myth No. 1: P/E ratios are effective methods to
compare stocks
It is easy to find
P/E (price to earning) ratios. Due to this, a lot of individuals are led to
believe that these numbers will tell them whether a particular stock is
expensive or cheap. This has also resulted in the creation of the belief that
these P/E ratios are effective methods to compare stocks.
The truth is that
those who participate in the stock market need Value to Price ratios. With
these ratios, investors and traders will learn whether a particular stock is
cheap, fairly priced or expensive. Of course, it is still necessary for
investors to have an accurate way of computing the stock’s value, but learning
about the intrinsic value of a stock is much more effective than P/E ratios.
Myth No. 2: Young traders and investors should take
greater risks
One of the most
common pieces of advice that young and new traders and investors receive is
that they should take more risks to increase their chances of better results.
This is something that should be avoided. The simple reason is because it can
result in severe financial problems.
What young traders
and investors should know is how they can make money in stocks that come with
low risk. They should purchase stocks that have consistent and predictable
growth earnings. They should never put more than 10% of their money into a
single stock. They should not own more than 2 different stocks in the same type
of industry. Lastly, they should use stop-sell orders so that they can further reduce
their risks.
Myth No. 3: Investing more leads to greater profits
Another very
common myth surrounding the stock market is that individuals should invest more
so that they can generate greater profits. This is not the case. Stock owners
have the opportunity for steady income stream by making use of the stocks that
they already own through the help of covered call options.
Covered call
options are considered to be one of the most effective ways to generate extra
income in the stock market. Those who undergo covered call writing can generate
profits from these investment options without having to further spend more
money on purchasing new stocks. The fixed monthly income that these options
provide allows investors to mitigate their risks. In addition, these options often
expire worthless.
Those interested
in this particular investment option should know that making use of reliable coveredcalls screeners will help increase the chances of becoming more
profitable. The use of such a service is considered by many smart investors to
be their best covered call strategy. To ensure that the screener is highly
effective, choose the screener offered from Barchart, a leading financial
market information provider. Visit barchart.com for more details.
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