Investing in Shares

Information and guide on how to invest in the share market.

Four-step guide to investing in shares:

1) Keep track of your shares. Make sure no major event has occurred that may affect the fundamentals of the company. Usually you may not bother about the fundamentals of the company. Usually you may not bother about the fundamentals while choosing a derivatives strategy. But never do a covered call on a fundamentally unsound company.

2) Avoid volatile shares. Opt for shares that rise gradually or move in a range.

3) At the end of any month, sell only the near-month options and not the mid-month ones. For example, at the end of July one should sell the August-maturity call option and not the September-maturity one. It can be mathematically proved, and also been seen that one usually makes more money this way.

4) Leave room for the share price: selection of strike price must depend on the view of the share price, and not on the yield by selling the option. The best-sold options are those that don't get exercised against you-not those that give you higher upfront fee.