I just look at Delta and Probability of expiring OTM. Then divide the Bid by # days away. Which ever expiration date has the most premium/days for a delta around 0.10 or 90% OTM, I choose that strike date. Let it expire worthless, reinvest, and do it again. However this only works if you use a great company with solid fundamentals like Amazon or an ETF like SPY. What do you think Steve?
Am new to your channel and as an educator myself, I command you on your ability to explain things so clearly, to the point and without pushing people to buy your services. Wonderful channel. May I ask you to make a video addressing that famous mistake on selling multiple covered calls at one time. One can not exit one by one but what are other options (if any) apart from buying back all at a loss or just keep rolling and hoping for the best. Thank you.
Steve, love every options video you've done so far. Thanks for making these easy to understand videos. Just wondering if you can do a video on how to use options calculator such as OptionStrat?
Hey Steve, thanks for your videos. You mention the connection with wanting a high theta decay as favorable in case you want to buy back your Call contract. Could you please share in what scenarios this would be relevant? I thought the aim was to have it expire worthless and collect premium. Thanks.
Hi Allen! I usually like to buy back my contracts if my CCs or CSPs reduce by 50%. I like to do this to reduce the risk of assignment, if that was my primary goal.
Can you do a video on what to do if your stock price is dropping quickly? Do you look at theta decay to decide to buy the contract back to reduce your loss? Could you do this if you're selling puts and call options? Thanks
@combatdouglas1306 let's say I 'sell' a PUTS contract for Amazon for $185 to expire in 45 days. If amazon shares drop quickly to $175, will 'buying' a CALL option at the same $185 prevent me from having to buy purchase the shares or just reduce the potential loss?
Buying options is statistically a losing strategy, unless the options have a longer expiration date with low theta decay. In order to profit from purchased options, the underlying stock must move in the predicted direction in a relatively small amount of time.
Hey Steve, I was trying to sell a covered call on my own,but I got cold feet lol.. I'm going to sign up for your next class.. please let me know when your next class starts Thanks.
Steve, does it make sense to sell multiple CC contracts on the same stock with staggered dates and strike prices, and then just roll them if the prices are right? I am finding that I enjoy semi-passive income a lot. (I say "semi" because I do have to keep an eye on them, unlike buy and hold investing).
Yes, I like to stagger these contracts with different dates. You can also consider diversifying with different underlying stocks so your portfolio isn't just tied to one company.
Hey Steve. When you said that buying back the call option to 'lock in your profits' - aren't your profits locked in the instant you sell the covered call? AFAIK, the only thing I lock in when I buy back the option is my ownership of the underlying shares.
Yep. When I buy back the option, I'm taking away the risk of share assignment (CSPs) or getting my shares called away (CC). Once the contract is bought back, I am no longer in a contractual obligation to buy or deliver shares.
You are essentially locking up your money when buying shares; it just becomes a question of how long you intend to hold your shares. No matter the answer, the effect is that you are putting your money to work (thus locking it up). Some people use CCs against their long term holdings (which I do and I can relate to your question) but we are still locking our money up.
First, thank you. I agree w/@here_to_learn92. Also, continuing education & practice w/pencil & paper before entering an order reduces risk& increases efficiency.
Hey Steve, thanks for your videos. You mention the connection with wanting a high theta decay as favorable in case you want to buy back your Call contract. Could you please share in what scenarios this would be relevant? I thought the aim was to have it expire worthless and collect premium. Thanks.
Hi Allen! Sure! Sometimes I'll let my contract expire worthless. However, sometimes I'll close my contracts early if they decay more than 50-80% to reduce the risk of share assignment.
I just look at Delta and Probability of expiring OTM. Then divide the Bid by # days away. Which ever expiration date has the most premium/days for a delta around 0.10 or 90% OTM, I choose that strike date. Let it expire worthless, reinvest, and do it again. However this only works if you use a great company with solid fundamentals like Amazon or an ETF like SPY. What do you think Steve?
Yep, I like looking at both the delta and prob. of expiring OTM. If I want to keep my long-term shares, I usually choose around a delta 0.10 too.
Am new to your channel and as an educator myself, I command you on your ability to explain things so clearly, to the point and without pushing people to buy your services. Wonderful channel.
May I ask you to make a video addressing that famous mistake on selling multiple covered calls at one time. One can not exit one by one but what are other options (if any) apart from buying back all at a loss or just keep rolling and hoping for the best. Thank you.
Sure! I can make a video on this!
@@CalltoLeap Thank you. I think this situation happens to many.
Steve is an amazing teacher! Thanks for all the positive energy, so refreshing. ❤
Aw thank you! 🙏🏻
Steve’s options videos are my favorite on RUclips!
Thank you! Glad you're part of the community ;)
I would like you to make a video of how you went from teacher to millionaire.. show us exactly how u did it and the time frame, thank you
Sure! I can make a video on this!
Steve, love every options video you've done so far. Thanks for making these easy to understand videos. Just wondering if you can do a video on how to use options calculator such as OptionStrat?
Hey Steve, thanks for your videos.
You mention the connection with wanting a high theta decay as favorable in case you want to buy back your Call contract.
Could you please share in what scenarios this would be relevant? I thought the aim was to have it expire worthless and collect premium.
Thanks.
Hi Allen! I usually like to buy back my contracts if my CCs or CSPs reduce by 50%. I like to do this to reduce the risk of assignment, if that was my primary goal.
I’m so glad I found your channel
Glad you're here!
Is there a good video on how to do this in a vanguard Roth IRA ? They only allow up to level 2 trades ?
Dude, this is so good. I'm on the right track, however, according to your other videos, I need to invest in more reliable stock. Thank you!
Can you do a video on what to do if your stock price is dropping quickly? Do you look at theta decay to decide to buy the contract back to reduce your loss? Could you do this if you're selling puts and call options? Thanks
Buy puts.
Total loss is premium paid.
You will make money i.e. yahoo puts $495 to $5.00. 490 a put.
@combatdouglas1306 let's say I 'sell' a PUTS contract for Amazon for $185 to expire in 45 days. If amazon shares drop quickly to $175, will 'buying' a CALL option at the same $185 prevent me from having to buy purchase the shares or just reduce the potential loss?
Buying options is statistically a losing strategy, unless the options have a longer expiration date with low theta decay. In order to profit from purchased options, the underlying stock must move in the predicted direction in a relatively small amount of time.
When stock prices drop, I usually like to sell spreads since IV may often times be higher.
@@CalltoLeap thanks! Do you have a video on selling spreads? Assuming you can sell spreads for puts and calls?
Great vid! Neither Yahoo finance nor Wells Trade seem to show the greeks. Where can I find the delta and theta values for options?
You can usually see this in your brokerage, like Schwab and Fidelity. :)
Have you ever done a video on what's involved in getting qualified to be able to do covered calls?
Hey Steve, I was trying to sell a covered call on my own,but I got cold feet lol.. I'm going to sign up for your next class.. please let me know when your next class starts Thanks.
Of course, Juliet! My next beginner's class is on Tuesday 5PM PDT.
@@CalltoLeap Thanks Steve for answering me..I need HELP lol.. I'll be there!
Steve, does it make sense to sell multiple CC contracts on the same stock with staggered dates and strike prices, and then just roll them if the prices are right? I am finding that I enjoy semi-passive income a lot. (I say "semi" because I do have to keep an eye on them, unlike buy and hold investing).
Yes, I like to stagger these contracts with different dates. You can also consider diversifying with different underlying stocks so your portfolio isn't just tied to one company.
@@CalltoLeap Yeah, I actually came to the same conclusion. Thx Steve.
Can you do the Vega?
You did the Delta, now the Theta. Can you the other two please.
Sure! The general rule is that vega or IV typically rises before an earnings date and "crushes" right after.
Ever cogitate a wealth management company ?
Hey Steve. When you said that buying back the call option to 'lock in your profits' - aren't your profits locked in the instant you sell the covered call? AFAIK, the only thing I lock in when I buy back the option is my ownership of the underlying shares.
Yep. When I buy back the option, I'm taking away the risk of share assignment (CSPs) or getting my shares called away (CC). Once the contract is bought back, I am no longer in a contractual obligation to buy or deliver shares.
@@CalltoLeap Perfect. Thank you kindly.
@@CalltoLeap when you sell CC, you only make profit if you can buy it back lower correct? not by just selling the CC alone!!!!
Can you help me execute my first cover call? I have Robbinhood and Fidelity but unable to do cover calls? see you Tuesday on your master class :)
See you Tuesday!
Steve you're good.
Thank you! :)
Series 65
Awesome 👍🏼
Thank you!
I want to understand this I’m still confused
Master class
bit.ly/3U9nHa8
How can I learn more on what is covered calls and how does it work?? Thanks
I have a lot of free tutorials on my channel! :)
最高素晴らしいかった👍👏
You are talking about locking up your money. But this isnt a cash secured put. Its a coverd call. So the only thing you are locking up is your shares.
You are essentially locking up your money when buying shares; it just becomes a question of how long you intend to hold your shares. No matter the answer, the effect is that you are putting your money to work (thus locking it up). Some people use CCs against their long term holdings (which I do and I can relate to your question) but we are still locking our money up.
Hey Steve, can you turn up the volume in your end??😊
Just turn ur volume up lol, I hear fine
@@chriscocoalminer3230 my volume all the way up . 😂. Resolved the situation by using my headphones 🎧. 🙌🏻
You got it! I think everything sounds okay on my end though?
First, thank you. I agree w/@here_to_learn92. Also, continuing education & practice w/pencil & paper before entering an order reduces risk& increases efficiency.
:)
Hey Steve, thanks for your videos.
You mention the connection with wanting a high theta decay as favorable in case you want to buy back your Call contract.
Could you please share in what scenarios this would be relevant? I thought the aim was to have it expire worthless and collect premium.
Thanks.
Hi Allen! Sure! Sometimes I'll let my contract expire worthless. However, sometimes I'll close my contracts early if they decay more than 50-80% to reduce the risk of share assignment.