Better Than the Trend

Trend Following, Covered Calls & Cash-Secured Puts: Building a Smarter System

Lately, I’ve been digging into trend-following systems, especially ones using longer-term moving averages like the 200-day. They’re pretty straightforward: Stay long while your stock or ETF is above the 200-day, and step aside when it dips below. Not flashy, but it helps avoid the worst parts of the market.

You’ll get some whipsaws—selling a little low and buying back in a little high—but over time, it can actually work in your favor. On a five-year chart, the “in-and-out” points helped dodge some messier periods and overall, the data show it can slightly outperform the market.

Now, add in some tools from the options toolbox: Sell cash-secured puts when the market hits a key low (you’ll need to define your own level here) and use covered calls when your positions are rallying. Together, this creates a much more flexible and efficient system. You either get into the market cheaper, or you generate income while waiting. Win-win.

It’s not about chasing the bottom—it’s about putting the odds in your favor and having a repeatable plan.

#OptionsStrategy #TrendFollowing #CashSecuredPuts #CoveredCalls

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