Money
Felix says covered calls are built to underperform the underlying stock over time
The Iced Coffee Hour
Financial Expert: The MOST CONTROVERSIAL Investing Myths That Cost You Money! | Ben Felix
""As a strategy, what people have to understand about covered calls is that the expectation is that you're going to underperform the underlying structurally, like that is what is going to happen.""
Felix tells the hosts that covered calls reduce volatility largely by capping upside while leaving most downside exposure intact, describing the payoff as “asymmetry” in outcomes. He says that makes the strategy structurally likely to lag the underlying asset over time, even if some investors enjoy the cashflow profile.
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The Iced Coffee Hour