CallWriter

So how does it stack up? Are the tools and resources you get worth the cost of subscription? What are the benefits and what are the drawbacks?

[Note: If this is a service you do find yourself interested in, please be aware that there are links below to discounted prices not available on the main CW site.]

Covered Call Background

You can click here for a detailed explanation of covered calls, but the gist is this: It’s an appealing option income strategy because in general you can generate your own steady income stream as long as the stock(s) you’ve selected goes up by any amount, stays flat, or even falls moderately.

Although considered a fairly conservative option trading strategy, covered call writing is not without risk. There are two primary risks to writing covered calls—big moves higher and big moves lower:

1. Big moves higher will leave too much money on the table in the form of capital gains you missed out on.
2. Big moves lower will blow through the limited to moderate protection the covered call trade naturally provides (the cost basis on your long stock is adjusted lower by the amount of premium you receive).

CallWriter - The Benefits

In light of those risks, proponents of CallWriter point out three relevant advantages of the service:

#1 - Trade Selection - Trade selection is absolutely critical to successfully writing covered calls. Anyone can set up a covered call trade. But whether you’re going to be consistently successful writing covered calls depends primarily on the quality of your selection process—the underlying stock as well as the strike price you choose.

CW provides three primary resources when it comes to trade selection:

• 13 Real Time lists of potential trades screened for a wide variety of different call writers (and even one for put writing)- automatically updated every few minutes
• Easy access to a variety of fundamental analysis resources
• Easy access to a variety of technical analysis resources

Why would long term subscribers find this valuable? In a nutshell it comes down to this: in order to consistently make money selling calls you’re going to need to be able to identify fundamentally sound companies with attractive technical charts whose options are trading at relatively high premiums.

#2 - Trade Management - No matter how much due diligence you’ve done, no matter how solid your initial trade selection is, sometimes a trade is just going to move against you. That’s why trade management is paramount.

CallWriter offers a couple of resources in this area:

• A proprietary Trade Management Calculator™ - Useful for managing live covered call positions for maximum profitability (when the trade is working out as you’d planned) and for making necessary adjustments (when the trade isn’t working out as you’d planned). It’s a good piece of software - you can easily compare the ramifications of different adjustments and, if necessary, quickly identify the best way to unwind a trade.
• The SuperPut Strategy – Another CW exclusive strategy. Covered call writing can be a consistent income generator even during bear markets, as long as the stock declines aren’t too severe in too short of a time. The SuperPut strategy gives the call writer an added degree of protection during periods of market unrest.

#3 - Investor Education - Some questions you should ask yourself when considering a stock or option trading subscription service is how much investor education goes along with it? Will the service make you a better trader? Are you learning actual skills or just blindly following recommendations?

In that regard, CW offers the following educational resources:

• Live monthly trading lab conference call available to members + archive of previous TeleLab calls. These calls run from 1 to 1.5 hours and include Q&A sessions at the end.
• "Getting Started Series" – Best place to begin for new members. It's a complete tutorial series on covered calls, the CallWriter Method, and an introduction to all the tools and resources available to members.
• CallWriter’s monthly MONEY newsLETTER and extensive archive. From John Brasher: "But in addition to covered call strategies, we cover so many option trading strategies that our MONEY newsLETTER is practically an option trading course in itself."

CallWriter Drawbacks

There are potentially two:

1. Price – At $79.95/month, no matter how good the service is and no matter how valuable the resources, the subscription price is simply cost-prohibitive for smaller portfolios.

   You might be able to get away with using the service if you have $5,000 in funds, but realistically you really need at least $7,500 - $10,000 in order for the service to be practical. Regarding price, there are a couple of other factors or alternatives you should be aware of.

   First, CallWriter does offer some special pricing options not available on the main site. The link above will give you access to membership for a discounted rate of $69.95/month. Additionally, you can select a 10 day free trial and still be eligible for the discounted rate if you decide to continue membership. Or you can sign up for one month and get the second month free. That’s also at the discounted rate of $69.95.

   Second, if you feel your portfolio isn’t large enough to justify the monthly subscription, but you’re still drawn to covered calls, another alternative you might want to consider is ordering a copy of John Brasher’s The Ultimate Covered Call Book with Bonus CD ROM.

   The book was recently revised and reprinted. You can check out the link above to see a full presentation of it. The regular price on the main CW site is $99.95. But through the link above you can get it for $89.95. This is the lowest price you’re going to find it for.

   Actually, that’s not entirely true. CallWriter currently offers a special Book + 2 months package for an additional discounted price accessible through the link above.

2. For Self-Directed Investors Only – Another potential drawback is that CallWriter is not a good service for those passive traders who simply want someone to email them once a day or once a week or once a month and tell them exactly what trade to set up and when to close it out.

   If you’re more interested in someone giving you fish than you are in learning how to fish yourself, this is definitely an unsuitable choice.

   As mentioned above, the service does provide a lot in the way of tools, resources, and educational material. But these tools are only useful to individuals who are serious about income investing and getting the most out of them.