Reply to thread

Re: Daniel Kertcher/Platinum Pursuits - Serious or Scam?

I was taught covered calls by a spruiker (got sucked in a few years ago!)......and they were only looking at the short option as income.  Any losses on the stock were not considered. It was explained that was like owning a rental house where the value would fluctuate but you keep collecting your rent.

So then the premium you collect is then calculated as a percentage of the price of the stock as that was your investment and not the entire trading account.

There was one couple who did this same seminar before me and, because they were using margin lending for their stock, the premiums from the short options were going into a different account.  They took this to a bank as "income" and they got a loan for a house... From the bank's perspective, it looked like they were getting regular income.

And all this was in a predominantly volatile sideways market at the time on Newscorp so the premiums were quite healthy.  How these people got on in a fast bear market, I don't know as we did not stick around once we realised the large downside risk as protective puts needed to be far away so that the call premium was not eroded.

I don't know if that's how Kertchner plays it, but likely it is similar albeit it with CFDs.  A guaranteed stop loss would be no different to a protective put, imo, just probably more expensive.

FWIW, that might give some insight as to how these apparent large returns are achieved by not deducting losses on the stock or CFDs from the premium "income".