# Selling index call strategy

The Selling Index Calls Strategy is also available as the sale of covered calls **(covered call options)** known. The Trader connects with this strategy securities such as stocks and options thereon, **(buy)**, the options are being purchased the shares simultaneously written** (write)** onlinescam what the strategy was also the name of buy-write strategy. Banks offer this strategy as discount certificates.

*Arrow Green rationale of Covered Calls*

* The covered covered options are superior to the mere purchase of shares and subsequent holding of shares with only moderately increasing, stagnant or moderately falling prices. The Selling Index Calls Strategy is therefore interesting for cautious optimism about future stock development.*

**Business is in the following two steps:**

• *purchase a particular stock (the underlying) as a multiple of 100 shares, because the option contract for a minimum of 100 shares is valid*

* • Sale of a call contract on this stock. A call contract covers 100 shares.*

**So first the trader buys, for example**, shares for *50 euros*, then he writes a call option and receives an option premium. Should the value of shares on the price of the option premium rise, the trader has earned something of value of the stock should fall below this price, losing only if the loss exceeds the revenue from the call option.

## Arrow Green Practical application of selling index call Strategy

The covered calls come from a time until about the beginning of the *2000s*, was traded in the very active with classic warrants. These certificates are indeed still available, but are *2007/2008* and* 2011* discredited something because you *Pricehistory* obviously not accurately and fairly reflect market movements since the financial crises of the years. They are calculated according to the classic *1973* developed Black-Scholes model. The two inventors obtained together with a third financial expert Online Scam, * Robert Merton*,

*1997*the Nobel Prize for economics, yet they went with hedge funds in the

*1990s*broke. This small market history will reveal that no amount of financial mathematics does not lead to the market safely control. Benoit Mandelbrot criticized because even violently, the Black-Scholes model in his book

**“Fractals and Finance”**, but he also found no mathematical answer to the financial markets, not even with the fractal mathematics. He had tried 30 long years.

### Conclusion for selling index call Strategy

**As a conclusion it is noted that the index Selling Calls Strategy functions as one of several possible hedging strategies if a certain expectation rises,** in this case, an only slight rise in the equity markets, stagnation or even a slight decline. In the other cases, this strategy produces losses. Now it is of course difficult to determine whether the stock markets go up or down slightly. Maybe they also fall abysmally, maybe they break up and out * (in this case, however, earned the stocks).* Basically Hedging can always be operated, there is thus never a complete hedge against losses, there is no secure market strategies. If it were so, there would be some very rich traders who would make by simple accumulation of their capital from a few hundreds or thousands of euros within a year millions and billions. However, such cases are not known, despite the technical possibilities offered by the trading today. Ultimately must be limited losses and also accepted. Hedging should only be economically, as it is still to manage.