Interview Central: Shane Johns, Part III
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November 7, 2008
Shane Johns is the President and Co-founder of CoveredCalls.com, an options data service for covered call investors. CoveredCalls.com was founded in 1997 as a resource to help Covered Call investors quickly identify high-premium covered call plays.
His company recently announced that their service went through a complete re-architecture, taking into account the great feedback they received from their clients over the years. The new re-launch continues to find and provide those unique high-premium covered call plays, but now also focuses on risk management, and protection of investment capital.
This is the final installment of my interview with veteran covered call writer Shane Johns.
Optionetics: How would you characterize your technical approach to the markets?
Shane: Since we approach it from the covered calls angle, we look for higher premium CC positions as a starting point to perform our research, then we do our technical and fundamental research on the potential plays. (If the overall CC position is not paying an acceptable CC premium, it''s not worth our time to research it).
Optionetics: What do you think are the greatest misconceptions beginning traders have about trading the markets and about trading systems?
Shane: That stocks are safe, and options are risky. We say instead: stock investment alone without options investment (for protection) is much more risky. And there are many good trading systems out there. Do your research, and find the system that fits your risk-versus-reward criteria, and your personality. Nobody cares more about your own money than you do, so educate yourself and be wise.
Optionetics: What kind of advice would you give a person just now beginning in trading the markets?
Shane: Start slow, and for sure use the "Virtual Trading" accounts that the good brokers provide. Play with "fake" (virtual) money first, before risking your own.
Optionetics: Can you describe what your average trading and analysis day entails from preparation to execution?
Shane: Our database runs automatically, scanning the entire market for the trades that are pertinent to our "covered calls" criteria. We then post this data to our clients on our website.
Optionetics: What kind of decision-making process do you go through before deciding on a particular trade and a particular sector of the market that would be worthy of putting on a position?
Shane:
- Is the CC premium worthwhile?
- Is the risk understood, and what is the potential max loss?
- What are the Bollinger Bands and RSI technical readings?
- Look to buy a put option for protection (insurance).
Optionetics: What type of analysis methodology do you employ to find great trading opportunities
Shane: Really our particular database scans start with high-premium CC searches, for both individual stock as well as ETF positions. We then pair those with "net protection" plays, such as our "net credit" Collars, or the other protection scans we do, such as for our "Married Put" selections.
Optionetics: Thanks, Shane, for sharing your thoughts about the trading business and the strategies you implement with our Optionetics reading audience.
To read previous installments of this interview, please click here.
Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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Listen to Jeff at www.ProfitStrategiesRadio.com
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