Covered Calls: A Lose/Lose Investment?

May 2005
Journal of Financial Planning;May2006, Vol. 18 Issue 5, p72
Academic Journal
The article discusses the covered-call investment strategy. The lure of high returns with minimal risks causes many financial advisors to recommend covered calls to their clients, but the strategy is disputed by some, who believe that the metric used to determine their performance is inherently flawed. The Sharpe ratio, which is traditionally used, is not ideal for analyzing the strategy. Instead, the article suggests that financial planners use the Sortino ratio, which is better adjusted for covered calls.


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