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What Is The Best Strike Price To Sell A Covered Call?
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- Опубликовано: 14 авг 2024
- In this video, I'm going to show you how to find the best strike price for selling covered calls. Selling covered calls can be a great way to generate income and today I'm going to show you how to do it like a pro.
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Today's Video will cover:
Intro 0:00
So you acquired shares 0:22
How to compare strike prices 1:08
Why a higher strike price may help 2:38
How to calculate the % move of a stock 4:40
Why you shouldn't choose the highest strike price 5:40
The final decision 7:50
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This is the beauty of the "pause" and "replay" buttons. I can go over this presentation again and again until the concepts become clear. Thanks again Markus.
Appreciate the pace of your delivery, the clear diction and the lack of juvenile distractions.
Hi Markus,
Just wanted to say I love your videos! Your explanations are top-notch, and watching the trading screen in action is a game-changer. Keep up the great work, and thanks a bunch!
Started trading the wheel strategy this year in may and i am up 47% atm with only 1 negative week. Loving the strategy and loving the videos, cant thank you enoughe.
Awesome! :) I am glad that you are loving it.
Was surprised to see the Annualized Premium of 36% was preferred over the Annualized Premium of 73%.
Is the wheel strategy applicable to new traders with much smaller accounts and focused on less expensive stocks?
Love your videos Markus! I've learned a lot with how well you explain everything, and really love how you show us some trading screen time! Keep it up! Thanks.
Awesome! I am glad t hat this helps!
Interesting approach, I do the same calculations by looking at Delta and decide on the possibility of an assignment!
Thank you for watching! ;)
Curious, on your screen it says " Got assigned 2,700 shares at $37". Does that mean you sold a put at $37 as your entry into this position?
Could you cover some of the calculations you might use to handle multiple assignments that end up triggering margin usage? So let's say I had five positions closing this week on a 250k cash 500k margin account and 4 got assigned because the overall market is down. So an approximately $400,000 position spread across 4 good companies; say google, Blackstone, Microsoft and Fedex, all are at good support levels and can generate covered calls at or above the strike price.
Yes, that's a great topic. I'll do a video about this soon - probably this week!
Thank you so much for this training.
It's helping make some cash in this volatile market.
Awesome! Thank you for watching!
You always give good info. I have a question, if I am under PDT rule, I can only do 3 day trades in 5 days. So my question if I buy stock today and sell them tomorrow. is that considered 2 day-trade or 1 day-trade or no day-trade at all since I buy and sell in different days? I am very confused
Very good video & explanation Markus! Your software does a great job!
Thank you! Glad you enjoy the software!
TPR closed at 35.35 on 8/26 and then dropped further to below 35 on 9/1. Curious to hear what you do next in terms of strike price and DTE for subsequent calls? Assuming you don’t want a strike price below the cost base of 37, do you then go out further into the future to still collect at least a half-decent premium? Asking this not to be critical of the wheel strategy but because I’m trying this strategy myself and often end up in a position like the current TPR situation in your example.
I'll just wait until TPR is at 36 again and will sell more calls. On Friday, TPR went as high as $35.40, and I'm sure, I can sell more calls this week 👍
Just looked at the closing price. $405 for a few minutes work :) Good to see you trusting your own software. Would be good to do a follow up video on this.
Will have a follow-up video coming soon ;)
Unfortunately, on the 26th, tpr dropped to 35.5. Interesting to hear what you did with that. What is the reason to provide the example with the unsuccessful result?
Then he just made the premium
What Ryan said: I'm keeping all the premium and I can sell calls again. This way, I'm making even more money! 😊
Exactly! And I can sell more calls since I still own the shares!
Unsuccessful? Correct me if I'm wrong but this is exactly what you want to happen
Hi thanks for your greats videos, I am following your advice very carefully. But I have a question, nobody talks about a strategy that seems to be very powerful, it is a kind of poor man's covered call "inverted " Instead of buying deep in the money, you sell puts deep in the money (With a maturity of more than one year) and you sell puts OTM to protect your premium. You receive a big premium at first and you protect it by accumulating small premiums. So we lose less money in extrinsic value and you lower your breakeven significantly , what do you think of this strategy? Thanks
In this example is good to sell calls at 37 because you get a good premium and you have mpre chances to jump out of stock..so you can restart the process and sell puts for the next week
Thank you for sharing your thoughts here!
excellent video
Awesome! Thank you for watching! ;)
Have a quick question. Assume if the weekly option expires on 9/23, can i write covered call options on 9/23 morning? If yes, what are the pros and cons?
Yes however due to time decay your premium is going to be a like 0.01 per contract for close strike prices
Hi Markus. At the end will you keep the stock collect the premium and again repeat the covered call or sell the stock in hand also.
Hello Ramesh! It does depend on which will be most profitable. However, my preference is to repeat the Wheel process :)
what if you bought the stock at 30
What happens if you get assigned at $37 and it drops to say $32 or $33... What strategy would you use then?
You can either wait until you can sell calls at your assigned price again, or you could lower your cost basis by flying "rescue missions".
Hello… is your wheel analyzer software available ?
Or available for purchase ?
Yes, it is available. And since you asked, I have here a special link that you can use to avail of a $2000 discount rockwell.infusionsoft.com/app/orderForms/PowerX-Optimizer?promo=cristyspecial. Just email support@rockwelltrading.com and look for Cristy for assistance.
Thank you!
You are welcome! ;)
based on what transpired between the recorded time of this vid and now, Markus should still be holding the stocks and selling calls against it. cheers.
Exactly! 😊
Nice video ! How does Delta play into your planning?
Great question. I personally don't use delta in my trading. For me, the "Premium per day" and "annualized ROI" are more important.
excellent.
Do you have a video on "what's the best price to sell secure cash put"?
This is what I have so far ruclips.net/video/WQt-3StLaFU/видео.html But I am taking notes of this topic for future video. ;)
Well. If stock falls below your price that you buy it (example in this case 30 dollars), do you sell covered call with strike below 37 dollars and than eventually roll up the call?
I know of a few traders who do that, and they call it "Kamikaze Calls". I personally will not sell calls below my breakeven. And thus far, I have only done this once or twice. Usually, I sell calls at or above my cost basis. Does this help?
@@rockwelltradingservices if the stock go down for me this is a possibility to gain. As I said, doing roll up if strike go below the price to avoid assignment. Could you explain better why don't you like it? Ty very much
Well, here's the challenge: If you got assigned at 37 but you sell calls at 30, your shares could get called away if the price is above 30 on expiration date. And YES, you can roll up UNLESS the stock makes a dramatic move. For me, this is playing with fire because when you get called away, you could make a $700 loss per option. Is this making sense? 😊
@@rockwelltradingservices ty, we are talking about a critic position of course. Probably it's better than do nothing while the stock go down ....with a lot of attention IMO.
Without the handy dandy calculator we would all be lost !
It really does help! :)
It’s all about the “if” unfortunately TPR is under $35.00 so we didn’t make it
That's even better because now I still own the shares and can sell calls again. This way, I'm making even more money 🙂