How To Sell $800 Amazon Covered Calls - Beginners Tutorial Before Earnings
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- Опубликовано: 27 июл 2024
- In this video, you'll learn how to sell covered calls on Amazon shares as a complete beginner. I use the Think or Swim platform to demonstrate this strategy, but you other platforms work the same.
I also talk about the pros and cons of selling covered calls, especially before earnings. This is very important for beginners to be aware of!
Let me know what other videos you want to see next!
I hope this video brings value to you!
-Steve
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I love the story time that made total sense as I’m a slow learner thank you😂😂🤷🏻♀️
Fantastic video! You are an excellent teacher! Keep them coming!
Thank you! Will do!
Agreed!!
U did such a great job explaining what a covered call is!!! 👍
I'm a visual and slower learner so thank you so much for your in-depth explanation. can you please make a video about pros and cons for choosing different strike prices? Thank you!
Hi Steve, new subscriber 1st time watching your video. This was very comprehensive and I will apply this strategy to invest. Thank you 😊
Hi Dexter! Thanks for the follow! 👋
Good video! Yes, another vid. reviewing the pros/cons of different strike prices & respective dates, & dividends would be helpful. Thanks.
Okay! I’ll make two separate videos on this since there’s a lot to go over.
Yes, a video on the different variables would be great value! Please do so. Thank you so much for your work on this topic.
Will do!
You are the best bro! Best explained video on covered calls in RUclips! Thank you so much! Subscribed and will be watching your videos.
Hi Steve, thanks for making this video real quick! if you can keep them coming on option trading that will be great.
Sure thing!
Love your video!!❤
You really made me do a lot of this year lol I got high saving accounts with Amex & checking account with capital one and cancel Wells Fargo & I never knew nothing about this stuff thanks mane god bless you🙏🏽👍🏽
And I got my first credit card with capital one silver one
Ah that’s awesome to hear! Enjoy your new HYSA!
Thank You Steve 💯😘
You got it Leslie!
Love the videos. Practical advice to take and steps do this stuff. there is much abstraction out there when it comes to money. Good see someone showing people practical steps for investing.
Amazing! Yes reviewing the pros/cons of different strike prices & respective dates, & dividends would be helpful. Thank you!
You got it!
Your good at teaching , thanks for explanation
Yes....a video on the different DTE and strike prices would definitely help me to understand the concept better
Steve is good teacher. Like what he dose at the school , ❤ thank you. 😊
Great video thank you very much
Thank you!
Yep make more videos!🎉
Awesome 👏
I appreciate you sir
What's the least amount of money you can start doing covered calls? Or does it always have to be a large amount?
Awesome video 🎉. Made option trading simple
Glad you liked it!
Great explanation 😊
Thank you 🙏🏻
Hi Steve, your videos are educational. Thanks for sharing your knowledge 🙏
Thanks Fem! I'm happy to share! :)
Do more videos on the variables of strike pruce. Thk you steve
Can I choose a stock that gives dividends and collect the dividends while selling an option on it?
Hi Steve I am a semi-retired firefighter/Paramedic i.e. I am receiving a pension but I am only in my late 50s. So I am still working full-time for at least another ten years. I like the idea of long-term conservative investment. But my on-hand cash is limited, way less than $18,000.00. What is the lowest realistic capital I should save up before I attempt investing in this strategy? I am not going to use my thrift/roth saving, that would be stupid. interesting information keep up the good work.
Excellent video. You did a great job explaining covered calls. Why do you choose a strike almost at the money, and will you sell a csp if the shares are called away?
Thanks for the info! Can you please advise if it makes sense to purchase fewer than the suggested shares? Are there any pro/cons?
Can I buy 50 shares instead of 100?? I’m just wondering. Thank you so much.
Nope. Options deal with only lots of 100 shares.
I am a new subscriber. Excellent video keep up educating us. Thank you.
Welcome aboard!
Easy to understand. Great job Steve...!! Now, if you could please explain what criteria you use for the expiration date and most importantly an attractive strike price. Thanks so much for another high quality video...!!
Okay! I can make a video on this!
Thanks for the encouragement 🙏🏻
Just so I understand... if you are bull for a stock, lets say Apple, even if it goes well below that price we bought at, we still get the premium and its only unrealized loss if we sell the stock... if we plan to keep the stock for as long as we can, doesn't matter if it goes down we get money from the premium
Hi Steve. Could you do a video on a strike price? How do I decide on a strike place? Thanks.
Hi, Steve
I really enjoy watching your video. I am new to Subscribed to your chanal.
Another video figuring out the strike prices would be great :D
Hi Dan!
I just made one! Feel free to check it out on my channel!
Newbie here and new subscriber. Thank you for the detailed explanation! Makes a lot of sense now 🙂 stupid question, when do the earnings report come? Does it vary for every stock?
They usually come every quarter. You can find out on your brokerage!
Yep additional video would be helpfuk
You got it!
So at the end of the expiry are we leaving the option call to 0 or what are we gonna do?
Hello, great video! I have a question; wouldn’t it be more profitable to do weekly options on amzn? (Or daily on securities where available)? Or am I missing something and monthly is higher profit?
Thank you for the video!! What do you think about covered call etfs? Can you make a video for that as well?
Great suggestion!
Ooh great question! Interested to know this as well
Do you have to hold the stock for certain time before iniating covered call? Also, let's say the covered call is excuted, what's the tax treatment for the transaction?
Hi Steve! I love this, thanks for sharing. What happens when there’s unrealized lost and the contract has expired? Also, can you share the platforms you are using?
Hi! When you have an unrealized loss, it’ll show a number that the value of your shares have fallen from where you initially bought them for. When the contract expires, nothing happens. You will now be able to sell another contract if you wish.
I use Fidelity and Schwab.
So I imagine the real trick is having several of these going at a time to maximize your return on the investment?
Your 100 shares are contractually tied up during the time you chose, so you can’t have several of these going on the same 100 share investment.
Could you please do some video that can invest in usd200?
What's the reason (if any) for the 100 share minimum purchase? Is it just not worth it for less shares or is that just the requirement by the system, etc?
Each contract controls 100 shares
How do you decide which covered call to buy? Specifically, how can you tell which theta decay is “best”?
Does Theta come into play in this strategy? You’ve discussed it in other videos but I didn’t know if theta decay would negatively impact your profits.
Hi
Steve
I am new member
Very much liked your videos very informative
I have one question
If you own the stock in your portfolio you can still able to do PUT option is better or call options
It’s advisable or not please explain thank you
Welcome!!
why dont you sell put first at 175 put if it hit, you get the premium and buy the cheaper share
Steve, I have a question.
If I have more than 100 shares bought them in different prices, sell 1 call option contract, and the stock price went above the strike price, do I get to choose which lot to sell the 100 shares from?
Yep, you should, depending on your brokerage. You can look in FIFO (first in first out) and LILO (last in last out). Customer service should help you with that. 🙂
That is a really good question.
@@CalltoLeapisn't it FIFO and LIFO?
How much do you need to buy AMAZON
I’ve been meaning to sell covered call on Amazon due to how lucrative the premiums are. I just didn’t think it was a great idea to do right before earnings
Can you buy back the contract if the stock is moving too quickly
So when do you get the premium? You sort of skipped that. Do you have to wait till the end or do you get it when the option is sold?
Boy, I was such a newbie when I asked this question. In anyone wants to know, you get it when you sell the call and you keep it whether the call expires worthless or you get assigned and your stock is sold away.
Could you recommend another stock less expensive but as good as AMZ? What do you think about MARA?
Hi, great information!!! Can you please make a video on how to sell the shares when the strike price is met? How does “Craig” contact you to get your(now his ) 100 shares!!??
Ah, this actually happens automatically by your broker when the day of expiration comes. You don’t have to do anything.
Thank you! Awesome video and yes, I'll be watching to see the steps that we need to take, if any around 6/7/2023.
最高素晴らしいかった👍👏💯
❤️❤️❤️
I like to know more about how taxes are handled?
If its in a normal taxable account it will be taxed at your normal tax rate.
@@BTBLive Correct me if I am wrong.
There is Short Capital Gains (securities held for less than 12 months) are calculated at the taxpayer's tax rate bracket (e.g. 22% for federal, single with income between $44,726 - $95,375).
So the covered calls are taxed as short term gains at 22% Federal (State ?).
If the stock get called away, then taxed at short term capital gains of 22% Federal (State ?)
If there is a loss, the you can only deduct $3,000 max at the same rates.
And I think long term capital gains are taxed at 15% Federal (State ?).
Federal income tax rates and brackets: www.irs.gov/filing/federal-income-tax-rates-and-brackets
@@GroovyMisfit Yes. So if you sell options but the strike price is never met and you never sell your shares then no Capital gains. BUT the option premium you were paid will be at your tax rate. If 1 year passes sense you bought the 100 shares and then a call option shares get sold you would be taxed long term capital gains.
Hi. Just to clarify, are you selling covered calls within your Roth IRA, or are you selling covered calls from an Individual account? Thank you.
Recommend opening a IRA Roth account. This way you won’t get taxed unless you cash out. You can make profits every year and not worry about paying taxes. Look up IRA Roth! 👍
Steve
One more question
Is it good idea to do options with margin money
Is it advisable
Please let me know
I wouldn't use margin right now, especially as a beginner and with interest rates so high!
Hi Steve, if the stock drops under the strike price, do we get to keep them? I don’t mind keeping them long-term.
In a covered call, yes, you still get to keep your 100 shares if the underlying stock doesn't hit the strike price on the expiration date.
Thanks Steve. Can you elaborate on what you meant when you said "I like to sell the strike price that is a little bit out of the money"?
I can elaborate on this when my next video comes out on Monday!
@@CalltoLeap Thanks!
What chart do you use?
I use Trading View
what happens if the stock price was to reach 185 before the expiration date. For example, the expiration date is 40 days away at a strike price of 185. However, a week goes by and the stock surpasses 185. Does the contract execute automatically? and if so, do I still get to keep all my premium?
The shares usually get called away on the day of expiration. Sometimes early assignment can happen too, but it's rare.
How high is the risk here vs day trading?
Basically The 2 biggest risks are you miss out if the stock rockets up. So a call at $185 is what your paid even if the stock is at $285 at expiration. Next risk is you buy 100 shares and the stock tanks. You will still keep you premium and your stock at expiration but the stock is now worth less than you paid. You might hold that stock for months at a "loss" before you can sell a call above you cost basis. So don't trade option on a stock you don't want to hold. NEVER SELL A CALL BELOW WHAT YOU PAID UNLESS YOU WANT TO TAKE A LOSS.
This ☝️
Can i start with 50 or less instead of 100?
Contracts are always in lots of 100 shares.
Can this be done within Roth IRA account?
Yes!! That's how I do it for tax free income.
Yep! It’s also tax and penalty free at 59.5 🙂
@CalltoLeap I don’t understand why someone would buy your shares for a higher price? Can't they just buy their own? Sorry, this is all new to me! ☺️ Maybe a silly question...
I didn’t understand this either until he told the story. Craig didn’t have the money yet to buy his own shares; he hadn’t been paid by his boss. Craig probably figured share price would go up higher during the contracted period and therefore he would buy Steve’s shares at a price he thought would be lower than what Amazon sells for at the future date.
@heidikamrath1951 OK, thank you!
Isn’t it better if stock value drops though because all u want this to collect money from premiums as passive income. If stock goes up and it gets brought then yes you make a little bit of capital gain form that but you can’t do this strategy no more as you have to buy back the stock which would cost even more
If the stock drops too much, it may be harder to get high enough premiums with selling the next covered call at the same relative strike price. There will also be a temporary unrealized loss as the trader waits for the underlying stock to come back up.
Is the share price really a con? Because couldn’t you just turn around and sell a covered PUT?
The price of the share? What do you mean?
Can you only buy 100 shares? not 10 or 50 etc?
Yep. Contracts are in multiples of 100.
@@CalltoLeap Thank you!
Do u teach this
Yep!
@@CalltoLeap nice
Remember. People must select sell to open, not sell to close.
Good eye!
What if we can’t buy 100 shares
Then you can’t do covered calls.
No wonder why people love penny stocks
Please don’t buy penny stocks though. There is way too much risk. 😞
Just do your absolute best to save enough money to buy 100 shares of one good stock. For instance, GOOG is about $170/share now and x100 is $17,000. Now, if you can't save that much and are trying to do stock trading/investing, you might wanna wait till you can. I personally think that doing stocks as a retail investor with under $50k won't motivate you much. With $50k liquid cash, you can apply for a margin account and it will double your ammo. Yes, $25k is the minimum but that's not enough.
There's no way you are selling $800 amzn cover calls unless if you are willing to loose all of your money.
This video is such a bad click bait. Thumbs down.
Just a very misleading video for over 90% of the video he gives you like the best case scenario and he spends very little time on the downside or how to manage a falling price just very misleading overall