RE: RE: Sorry, GreenGenieGreenGenie,
Everyone here has a different strategy and believes his/her strategy is the best, so I'm not going to lecture you or anyone else on the one I think is best. And you're absolutely right that the only way to gain experience is to try new things. You're also correct when you suggest that, once a call is written and the SP takes off beyond the strike price, there is nothing an experienced options trader can do that an inexperienced cannot. In fact, neither can do anything except wait for the contract to expire and have their stock called at the strike agreed to. You didn't mention the other side. What if the stock plunges? Again neither an experienced nor inexperienced trader can do anything except pray. You are committed to holding the stock until expiry (and your broker won't let you sell it in any case.) It was because of this second scenario that I urged caution to people new to options.
Writing covered calls serves different purposes for different investors. One may buy a stock and write a near-the-money call to collect some insurance. Another (like the BMO Financials Covered Call ETF) might buy and intend to hold a dividend paying stock and enhance the total return by writing an at or near-the-money call. A third might use this strategy as the PRIMARY vehicle for generating returns. This is what I do.
Let's consider an example. This week you bought SLW at 37.70. You hoped that was near a bottom and that the price would soon shoot up. It may very well and all SLW longs hope it will. But none of us can KNOW that it will. In fact, it closed Friday at 33.14 for a loss of 12%. What would I have done, using my strategy. First I wouldn't have bought the stock. Last weekend was options expiration weekend and I had a lot of cash - some from having my SLW stock called away. My intention was to replace the SLW and also buy some FM and, of course, immediately write calls against them. But all week the market kept telling me it had further downside, so I did nothing. I need to feel we're at least bottoming before I'll act. But suppose I had felt that at 37.70. I would have bought the stock and immediately sold an Oct 38 call. The premium would have been about 2.30 or about 6%. Effectively, I would have sold the stock for 40.00 a month from now. 6% in a month is pretty good. If I can do that 8 or 9 or 10 times a year, I can make some pretty good money. If the SP doesn't get to 38.00 in October, I still have my 2.30 (which, of course, I'll use now to buy another stock and write an October call against it, too).
And that brings me to my last point. Anybody - with or without experience - can perform the mechanics of writing covered calls. But experience allows one to bring a bit of "art" to the task. The idea is to maximize returns. This is difficult when you are essentially working at cross purposes. You want to buy the stock at the lowest possible price (implying a lower call premium) and you want to obtain the highest possible premium (implying a higher stock price). Knowing when to write, when to wait, what strike to choose, whether to select a one month, 2, 6 or 12 month expiration, how the premium reacts to SP movement, etc. takes experience.
As far as TA goes, I pay attention to it only because a lot of others do and base their trading decisions on it. This is particularly true for moves through major resistance/support levels. More often than not, the SP or index keeps going in the same direction for a while. It's good to know. Beyond that, I think technicals analysts sometimes read way to much into their numbers. (TAs out there - don't get mad. It's just an opinion.) Your point about self-fulfilling prophecy is not without merit.
Best of luck to you, GreenGenie.