Covered Calls, Using Discount Brokers

Compound Stock Earnings (CSE) is the leading provider of covered call investment education services. CSE shows investors how to earn a 3 - 6% cash return per month investment regardless of the direction of the stock market. The covered calls strategy is based off the book Covered Calls and LEAPS- A Wealth Option+ DVD: A Guide for Generating Extraordinary Monthly Income, written by Joseph Hooper, Aaron Zalewski and foreword by Robert Kiyosaki the author of Rich Dad, Poor Dad. In this article, the authors talk about selecting a brokerage house.

Selecting a Brokerage House

The significance of brokerage commissions should not be ignored. An investor’s choice of brokerage house has a large impact on overall profitability.

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Whether you are investing in covered calls or LEAPS, you must use a discount broker. Discount brokers have cheaper rates of brokerage/commission because they provide an execution only service (they o not provide research or advice). Both covered calls and LEAPS investors make a significant number of transactions each month and realize small profits on each of these transactions. Therefore, transaction costs have a very high bearing on profitability with this method of investing.

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If you are investing in the U.S. market, there are several discount brokers very suitable for this type of investing. Deep discount brokers are even better, as they have extremely cheap commissions, so small that commissions needn’t be accounted for when considering profits on trades. For example, one industry-leading deep discount broker charges commissions of just $0.75 per 100 shares and $0.75 per option contract- with no minimum trade size! If an investor buys 100 shares of a $30.00 stock, this is a $3,000 investment. The commission for this stock purchase and the sale of one option contract would total just $1.50, or 0.05 percent of the invested capital. This is a remarkable rate of commission, and, for all intents and purposes, the trade is practically commission free.

What are covered calls?

The brokerage industry is constantly evolving with new online players entering the market and existing brokerage houses regularly making changes to trading platforms and commission structures. The current industry best brokers for using this technique can be found at www.compoundstockearnings.com/brokers. We highly recommend that investors use one of these brokers because trading platforms and transaction costs have a dramatic effect on profitability.

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The main brokerage house Compound Stock Earning recommends is OptionsXpress®. OptionsXpress is a pioneer in online investing. This unique and progressive company is driven by a veteran management team dedicated to providing the self-directed investor with the best overall online trading experience and value.