Paying Tuition

My $100 Investment Lesson

They say experience is the best teacher and, sometimes, experience charges tuition.

Being big on dividend investing to fund my retirement, I am constantly looking for ways to maximise the returns on my investments. So, make the ETFs I hold work harder, I recently dipped my toes into the world of selling covered calls.

I did my research. Read the articles. Watched the YouTube explainers. Ran the numbers. But I never felt fully ready. But as with all things in life, you have to take that first uncomfortable step.

I finally pulled the trigger on my first trade — selling one covered call on ARCC. I sold it at a strike price of $21 and collected a premium of $20. My strategy was for the option to expire out of the money so that I can keep the premium and still hold on to my shares. But the market had other plans. The option closed in the money, and my shares were assigned.

After factoring in the premium I received, my purchase price and the dividends I collected the past year, I ended up with a loss of about $100.