Buy Write Covered Calls (Week 5 of 12) | Getting Started With Options | 12-5-23
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- Опубликовано: 10 сен 2024
- Getting Started with Options | Barbara Armstrong | 12-5-23
Characteristics and Risks of Standardized Options. bit.ly/2v9tH6D
In this webcast, we provided an overview of Buy Write Covered calls and discussed when and why some traders might consider using this strategy. We placed an example trade on the thinkorswim paperMoney platform. We then looked at 3 different buy write covered calls already in the example portfolio and discussed different trade management options.
Looking for growth or income-generating strategies? In this fourth option strategy episode, you’ll learn what a buy-write is, why investors interested in generating growth or income in their portfolios might use this strategy, and the risks associated with it. You’ll also explore which market conditions might be more effective for this strategy.
0923-3HLH
Options involve risks and are not suitable for all investors. Please read the Characteristics and Risks of Standardized Options carefully before trading.
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I love this coaching video
Glad to hear it! Here is the link to the entire playlist: ruclips.net/p/PL8a6s5nq1lPRcGlhhMLSqx1BK1rttI00R&si=d-R0SIjaa2UP3s04
Getting Started with Options is taught in a 12 week series. We being again on Feb 13. You can join us live on Tuesday's at noon ET. You'll want to subscribe to the Trader Talks Schwab Coaching Webcasts channel. ^Barb
Enjoyed, thank you
Glad you enjoyed it ^Barb
Hi, Barbara! Question: If it is best to emply this strategy when volatility is high, why would a trader not consider delploy this strategy around earnings or other corporate actions? Volatility can be high around these events. The question is precise, keeping in mind there is a range with volatility and certain corporate actions (i.e., earnings) may carry "too much" volatility for "most" traders. Appreciate your time and efforts.
Some traders might choose not to trade this over earnings because they might want to avoid the chance of the stock gapping down and ending up with a greater loss than anticipated. It is considered a more conservative approach for that reason. The tradeoff as you suggested is that the trader is not taking advantage of higher call premiums approaching earnings. Each trader however has their own approach. Some traders might do the opposite and use this strategy approaching earnings with the goal of benefiting from the higher premiums approaching earnings & hoping to benefit if the stock gaps up. ^Barb
I love the video series and am learning a lot but have something I don't understand in this video. When you were disussing the example trade on AMZN (around the 27:00 mark in the video), you put in the Buy Covered order at $142.27. At the time, AMZN was trading at $146.24. I don't understand where the $142.27 in your buy order comes from?
Good question. The stock was trading at $146.24 and the value of the covered call was $3.97. The trader received $3.97 for selling the call resulting in a net price, in this example, of $142.24. ^Barb