When there is high market volatility, stocks can move significantly up or down in short time periods. The volatility allows us to effectively generate monthly income on the portfolio by selling monthly covered calls based on rules based models and analysis. Our traders actively manage the portfolio and we use a very conservative, income producing option over-lay strategy. By selling monthly covere
d calls, the strategy allows us to manage uncertainty on a month-to-month basis. Selecting the right combination of investment holdings for a portfolio is an important part of investment strategy. We designed a proprietary ETF Model Portfolio, Enhanced Dividend Covered Call Model Portfolio and Enhanced Covered Call Over-Lay Strategy with the objective of achieving competitive returns when compared to standard stock market indexes, while reducing volatility in the portfolio. The Capital Wealth Planning ETF Portfolio typically consists of 9-11 ETF’s that provide exposure to thousands of individual securities. The use of ETFs allows CWP to reduce the standard deviation of the portfolio and achieve competitive returns. With a non-leveraged ETF that performs inversely to the S&P 500, we are able to profit when the market declines. This allows clients to include a defensive position in their portfolio. By entering into contracts to sell our investments at a higher price, one month into the future, we earn consistent income plus dividends and capital appreciation. The Capital Wealth Planning Enhanced Dividend Portfolio features high-yielding equity securities that have a history of increasing annual dividend yields. CWP is seeking out equity assets that correspond with our rules based model for conservative-income and growth-oriented equity investors. These equity assets also represent a well-diversified portfolio across various sectors. Dividends received and income generated from selling covered calls can produce 5-7% annual cash yield plus capital appreciation. Enhanced Stock Covered Call Over-Lay can help investors monetize the volatility of concentrated equity holdings by selling out-of-the-money call options on the underlying securities. Investment programs can generate a modest additional income stream, supplementing the total return of the underlying security and improving cost basis. Capital Wealth Planning monitors all open option positions on an ongoing basis and continually seeks to maximize income enhancement from the concentrated positions. Unlike many traditional covered call techniques, we target monthly expirations. We identify and “dial in” the most appropriate and richest yields and write our calls accordingly. As the underlying stocks move with the market, we constantly analyze all overwrite call positions to allow our clients to participate in up-trends. As the stocks approach our Strike Prices, we can sell the shares or roll-up the options and adjust our targets. Covered Call Income Enhancement
Writing covered calls provide a conservative, proven strategy for generating monthly cash flow on securities that you own. Essentially, selling covered calls helps investors to take profits. The strategy is similar to collecting “rent” while the asset reaches the projected target-selling price decided by investor profile. This sell-only options strategy provides the buyer with the right to buy your security at an agreed upon higher price, typically one month in the future. The options often expire at the end of the option period, allowing you to simply keep the “rent.” This strategy has been consistent in delivering returns of 5-7% as an enhancement to dividends and capital appreciation. Capital Wealth Planning, LLC page Terms of Use
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