Like daytrading, most folks should never dabble in advanced options. If it has more than two legs and a fancy name, proceed with extreme caution. But, there's no reason why every investor on Earth with 100 shares or more of an optionable stock should not be writing covered calls.
When you use covered calls, you assume a modicum of additional risk if the stock you own decreases in value. It depends on the extent and timing of the decline. But it's not enough risk to keep even the most skittish investor away from the best example of "free" money the stock market offers, aside from dividends.
5. "You sold Apple (AAPL - Get Report) too soon."
I love this one. It's not just AAPL. You could say the same about a whole host of other stocks investors have sold "too soon."
A gain is a gain. Leaving money on the table means you're making money. I would much rather go the disciplined route and take profits -- even if I end up missing out on way more upside. Sticking to that philosophy ends well more often than not.
Add up the losses or barely breakevens on stocks that you got greedy with, only to watch them fall. Times two for the ones you got emotional about and stubbornly held on to all the way down to far south of breakeven. Those experiences -- which can crush a portfolio -- more than offset regret over the ones that got away.
At the time of publication, the author was long FB. He was also long VIAB in a custodial account he manages for his minor child
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.