Lurker - I don't think selling covered call options is awful or contradictory to a long. It is rather a different way to mitigate risk, which is something most traders do. People very long a position often use put options to hedge their positions because the options cost is low and while it will diminish their gains on a big price rise it will protect you in the event of a steep price drop. This is something my trading mentor stressed, though sadly I never embraced it.
Selling covered calls is another way to mitigate risk.
Someone who is long thinks the price will rise and they will realize a gain.
Someone who buys option calls also thinks the price will rise but is leveraging fewer dollars for the potential of a far greater return. The risk in options is greater because there is the possibility of the options expiring worthless. But an option trader can make money even if the strike price isn't reached because the price of options rises with the PPS and the options buyer can sell those options anytime. If the price rises even though less than the strike they can still make money.
Selling a covered call to an options buyer is in no way suckering them. The person selling the covered calls thinks the price will rise but either not as high as the strike price or not as quickly as the expiration date. Both are bullish but to different degrees and are not in any way IMHO taking advantage of one or another.
It is much different in my opinion than a person who is short trying to get people to buy his shorts while he is thinking the price will go down.
I think Lopezian's comments on selling covered calls is worthwhile and presents another way KRY longs can make money. Since none of us are making mone right now in buy and hold I welcome that input and I wish I had sold some covered calls along the way as I so often considered doing.
Selling Covered calls can be a win-win. The call seller gives up gain above the strike to an options buyer who fully goes into the position knowing they are gambling on a price rise abovethe strike before expiration.
