✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
really enjoyed watching your video! how does a trader know what the extrinsic value is at any given time? you said extrinsic values less that 0.25 will likely be assigned...once ITM, do you look at the a given date from expiration's premium bid ask and subtract the intrinsic value (which is taking current share price and subtracting your strike price? thank you or other readers' helpful response
Of course, you could do nothing and not manage a CC at all! Hopefully, this video gives you some things to think about in the event that you do! Let me know what you think! -Chris
You are a fantastic options teacher!! All your videos are so well produced and easy to understand! Thx for sharing your knowledge with us! You make the best options videos on the Internet!
So what I understand from this video are: I get the premium for selling a covered call and I can still make additional money if the stock continue to trend downwards?
I think on of the advantages of a covered call strategy is being exercised. As long as your strike price doesn't justify for a realized loss at expiration, you come out with a wining trade + the premium collected. Seeing the type of movement the market has right now, I'm amazed more investors don't sell covered calls, especially with swing trades. Either way, great video as always. Your explanation are both informative and easy to understand. I wish I found this channel when I started out lol
Can you please make a video in regards to what it means to buy back the option and closing your position once you have reached your max profit and how?
Hey bro! Thank you so much for this video it is extremely helpful. I was wondering at expiration date and the call expires worthless, there is no action needed on my part right? As in it is a worthless contract so I don't need to buy it back? And the same is for when it's in the money do I need to buy back the contract or will the person just exercise it and my broker will automate the process of selling the shares?
In the case the stock is increasing in price and we have a short call open on it, at which point the value of theta and delta correlates indicating that it is probably a good time to close the position close to breakeven (pay back the premium)?
I think what you need to look at is the remaining marginal APY on the covered call. in other words, what how much more is there left to earn vs how much time left until expiration. if you sell a covered call for 30 days, and you made 50% of the premium value in the first 10 days, then buy to close, but if there are only a few days until expiration, then let it run, because theta will erode the price more and more quickly.
So I’m new to selling covered calls, is it possible to sell a covered call and be able to buy back the covered’s premium 30-40% the same day? Had a situation where I sold a covered call at 2.59 and bought it back the same day at 1.69 with a 30 day expiration. Any feedback would be great, thanks!
I just did this recently. Yes, you can actually daytrade covered calls if you have a volitile stock that you are able to recognize a range that it is trading within. I sold and covered twice in one day, then did it the again a few days later when the stock dipped. After covering, I ended up earning more than the total premium. Then the stock actually went back up so covering was all profit. One of the things the video doesn’t explain clearly is that you do keep the premium you sold if the option expires itm and is exercised, or is exercised early. You only lose if you sell a call below your cost basis, which is why you always sell a call with a strike above the average price you paid for the stocks. This way you make a profit still and keep the premium as profit, but you only miss out on capital gains above the strike price. I would not consider this a loss. You can only lose by selling a call below your cost-basis
Hey brother, I have a quick question. When buying that 100 shares. Which account do we use. is it the Short Margin account that has to be utilized for holding the shares, then do the cover call or in my Cash account then sell the cover call in my Short Margin account? Great video, I totally understand how it works now, thank you. Only thing is, I don't have a clue to which account I have to first purchase the 100 shares. Have an awesome day, warmest regards.
You can buy shares in a margin account, which will only require 50% of the share value as margin requirement in most cases. Meaning, you can buy $10,000 worth of shares for $5,000 in margin (2:1 leverage). I wouldn't recommend maxing out your margin just because you have it, though. If you have $5,000 in an account, I wouldn't buy more than $5,000 worth of shares. In a cash account, you won't be able to use any margin and will need to have 100% of the share value you're purchasing (max $5,000 share purchase with $5,000 cash in an account).
@projectfinance Thanks brother for the response. So just to recap.. I can buy from a Margin account the shares I want to hold to cover call on , not have tu use my margin short account? Warmest regards, and thanks for getting back to me.
@@danielharris7652 thank you for your reply , if I only day trade , not holding the options overnight , can I do it let’s say for exemple on Friday last day of expiration ? (The expiration day is the same day I’m trading ) .
@@HD-mr2cn I don't understand the logic of doing that with deep in the money long calls but it's not a covered call if you don't already own 100 shares.
Instead of buying 100 stock, if someone buy in the money call option (premium is close to zero or only few dollars to pay), is it make any difference ? Adv. is less investment than stock...
13:39, these premiums seems a bit off, i did check exactly your parameters and only get premium like that if you go for a much closer call like 135, although you have no IV represented and that migh scew my had 22%, any suggestion:)?
The examples were from all different time periods and market volatilities. Some of the examples were certainly during periods of high volatility and therefore more expensive option premiums compared to now.
Chris, thank you for another brilliant class. Where do I find the link for joining tasty works with your code on it? I'd like to check them out. Kind regards Ricardo Restrepo
One of the early assignment risk is the capital gain tax bill for taxable account you might not plan for. Depends on your situation but something should be mentioned more .
What are your thoughts on rolling the covered call? I tend to sell my calls for a shorter expiration date, normally 10 to 20 days, and if the stocks begins to climb to high, I will roll the call to a later date at a higher strike price and collect a little premium in the process.
Same question I asked. My concern is that the underlying blows up and I lose my shares for cheap. Couldn’t I roll up and out until either the stock comes back down or I let my shares go for a price I’m comfortable with? Any risk in doing this?
If the underlying price goes up quickly, why not roll the call out and sell whatever call nets you enough to buy back the original short position. Then theoretically couldn’t I do this until I sell a call at a strike I’m comfortable letting my shares go for (assuming it continues to climb)?
Many thanks Chris. Your videos are always the best !!! BTW, wouldn't vertical debit call be not needing to worry about early assignment on the short leg (when price goes up). Because you always has the long leg where you can buy back to off set the early assignment ?
If I sold a cover call to receive $0.02 in premium and I had to have $150 options buying power, my question is what happens to that buying power? Did I just spend $150 just to make $2, so does that mean my account is-148 now or does that money stay in my cash balance? I'm just trying to understand what happens to the options buying power money that you have to have in order to sell a cover call
What percentage do you shoot for when you close a call? I know you said near 100% when it hit $350 and in reality the only way to hit 100% is if it expires out of the money. I know most people set a percentage before they consider closing
In the first two cases where the call value decreased, would it not be better to buy back the calls earlier, at 60-70% profit? You waited longer, made nearly 100% profit, which is ideal. But if the stock took off when you were at the 70% profit mark instead of continuing to move in your favor- decrease in price or stay the same, you could lost a 70% max profit. I’m suggesting to apply the same strategy you are, just earlier. The waiting until near-100% profit mark as in your examples seems too late IMO, at least that’s my risk-reward analysis. Any comments would be appreciated, I’m new to options and trying to optimize my trades.
What do you think about filling a video on how the option value is determined? Maybe a bit “mathematician”.. but i think it could help to clarify many many concepts expressed in all this tutorials you share 😊
Hi Chris, I have been watching your videos for a while now and have subscribed to you channel. I have sent the word out in my friends network as well. I really enjoy your explanation about options strategies Well thought out and informative. Do you have live sessions where we can ask questions? Please advise. Thanks
@@projectfinanceyoutube3000 Already did subscribed, quick question, why the expiration shows Saturday on risk profile to see maximum profit? If we select Fridays which is the actual date of expiration and it did not show the maximum profit so when should we close the position? I would think before the expiration but i will not lock in full profit potential. Correct?
Hi Chris, great video on managing thhe covered calls. I think your video is better than those from tastytrades. I am wondering what software do you use to generate those PL graphs the top and bottom one. Is there a software that let you plot a P/L graph after you have closed a position and see if you had closed it in the most optimized time instead of waiting until expiration? Manually keeping track and drawing the graph takes a lot of time. Thanks.
To close the entire covered call you'd buy back the short call and sell your shares. You don't want to close the shares without closing the short call because you'd end up with unlimited upside risk.
Good video as usual, but I wish you would do a video on rolling covered calls to try to prolong the position as much as possible or to try to reduce the cost basis as much as possible when the stock has moved against you.
I have done a number of rolling covered calls. Deep in the money on NVDA. Actually, over a $100 in the money. Getting ready to roll it again. Each time try to get more premium. This will be my fourth time rolling. I always roll two weeks out and keep track of ex-dividend dates. I have been assigned on ko and dvy but typically was not watching the ex dividend date. Also, be sure to watch his video on expiration. He does great work!!
@@scottreesetradinginvesting7936 I agree in the case of naked short options, but in the case of a covered call, there's no gamma risk. All of the risk lies in the long stock which has a gamma of zero. As for early assignment, that works in my favor since I immediately capture any extrinsic value remaining in the short call.
Thank you! I spend so much time editing some of these videos that by the end of hearing it over and over again I feel like it’s not good haha so thanks for the feedback.
Chris, what do u think about trading 1-2 weeks CC instead of 30-45 DTE, although i get less premium, it gives u the flexibility to close or roll the CC for credit in the event that your CC gets tested. Also, theta decay would be the highest in the final week of the option
Your shares can get called away at anytime when it’s above your strike so holding and hoping it falls below your strike by expiration doesn’t always work. The contract can be exercised buy the buyer at any point when the stock price goes above the strike price you have. I have had this happen to me
It's difficult to analyze these scenarios unless we know if the investor is wanting to own/keep the shares. Without this info it's not ez to determine what strategy to employ. IMO the only real risk is to the downside. One can't lose a dime even if exercised on the upside. But if investor wants to keep the stock then roll up. Even in scenario #1 with stock going down the investor could have rolled down to capture more premium. But again it's difficult to know what to do without knowledge of intentions of the investor.
Another great video. Your videos have been a godsend for me! Making good monthly income now with selling options. Your video on expiration has changed how I trade!
@@Eastbaypisces Thanks. I use cash secured puts, covered calls and vertical put credit spreads. Another RUclips suggested rolling a position from one stock to another. Primarily with puts. Thinking of doing this with one of my positions that is way deep in the money that I have lost confidence in. Have you ever tried this?
Great video. But you said it clearly. Selling or getting assigned, would not be a bad thing cause it’s your max profit. I would enter trades with no emotion or attachment to my shares. I could care less about losing them. I actually want to get assigned every single time cause I would be selling (one strike above ATM) to collect bigger premium. I have a tax free account where I would buy more shares to hold. Index funds and dividend payers. The options is just my weekly income. Don’t care about the shares. Just my take.
Question: If your shares get assigned, dont you lose the value (the cost you paid for your shares)? Typically, the premium from the option is less than the cost of your shares. You would be losing money in that case. Am I understanding those scenarios correctly?
@@emmanuel4720 if your shares are assigned, you reached max profit. You lose on opportunity cost if the shares rocket up. Consider this, you buy 100 shares at $18 per. You wrote the covered call for $20 a share. Premium is say $70 for the contract. A week later, the shares hit $21. You collected $70 up front and $200 for the shares being assigned. Total of $270 and original capital back. How are you losing money? You lost the extra dollar per share on opportunity cost. But made $270. That’s a win in my books. It’s all about cost basis.
So I was under the impression that when you sell CC you collect your premiums and that's it, didn't know that you can lose money depending on the price movement of the stock. (Not counting the losses of the shares that we hold)
You technically keep the premium, but that doesn’t mean you can’t see a loss on the contract. The loss on the call contract as the stock price increases is what causes the CC to have capped upside. At a certain point, the short call will lose $100 for each $1 increase in the stock price while the shares will gain $100 (no change in P/L as described by the risk graph).
I don't understand why "losing your shares" is so often presented as a bad thing. If you start planning your strategy as this being the goal, there is far less to manage. You get the premium and the gains above your entry price to the strike. I guess people do this with companies that they are in love with? Not sure. Just rinse and repeat. Plenty of opportunities out there.
Really? Think about if you held APPLE for years and you were sitting on a 100k capital gain. By letting your shares go you are liable for 15k in capital gains. I’d like to avoid that so I roll up and out to avoid assignment.
@@cb24955really? Stocks don’t just go up. They come down as well. He could just wait for a good entry again and resell the calls and collect premium. Much more profitable this way.
Haha I’m 28! I’ve been studying this stuff and actively involved with options pretty much full time for 8 years so it’s just experience/exposure. Thanks for watching/commenting!
Can you explain what is exactly wrong with buying a stock for 125 and selling for 135 ? ... where`s the loss ? ... you keep the premium and make $$$ on the stock price right ? ... only an idiot would set a strike price below the stock purchase price, right ?
✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
Do you ever roll an itm option to collect more premium and keep the trade going. Or just let assigment take place?
really enjoyed watching your video! how does a trader know what the extrinsic value is at any given time? you said extrinsic values less that 0.25 will likely be assigned...once ITM, do you look at the a given date from expiration's premium bid ask and subtract the intrinsic value (which is taking current share price and subtracting your strike price? thank you or other readers' helpful response
This is the missing link I was looking for in managing covered calls. I am so grateful. You rock!!!
A tool every options trader should have in their tool belt! Great video!
Of course, you could do nothing and not manage a CC at all! Hopefully, this video gives you some things to think about in the event that you do! Let me know what you think!
-Chris
"not managing at all, the best kind of management" XD
You are a fantastic options teacher!! All your videos are so well produced and easy to understand! Thx for sharing your knowledge with us! You make the best options videos on the Internet!
Contact him is very good man that can answer yourself
＋𝟭𝟳𝟭𝟲𝟳𝟵𝟱𝟲𝟰𝟳𝟬
Is this strictly example ? Or do u actually short your options to guarantee profit?
Could you explain the short call value by delta and extrinsic value. Hard to work out the graph when you are monitoring your trade.
Is there software to manage covered calls? Maybe generate plots and optimize the best time to close.
So what I understand from this video are: I get the premium for selling a covered call and I can still make additional money if the stock continue to trend downwards?
I think on of the advantages of a covered call strategy is being exercised. As long as your strike price doesn't justify for a realized loss at expiration, you come out with a wining trade + the premium collected. Seeing the type of movement the market has right now, I'm amazed more investors don't sell covered calls, especially with swing trades. Either way, great video as always. Your explanation are both informative and easy to understand. I wish I found this channel when I started out lol
what u mean especially w swing trades??
Can you please make a video in regards to what it means to buy back the option and closing your position once you have reached your max profit and how?
Hey bro! Thank you so much for this video it is extremely helpful. I was wondering at expiration date and the call expires worthless, there is no action needed on my part right? As in it is a worthless contract so I don't need to buy it back? And the same is for when it's in the money do I need to buy back the contract or will the person just exercise it and my broker will automate the process of selling the shares?
In the case the stock is increasing in price and we have a short call open on it, at which point the value of theta and delta correlates indicating that it is probably a good time to close the position close to breakeven (pay back the premium)?
I think what you need to look at is the remaining marginal APY on the covered call. in other words, what how much more is there left to earn vs how much time left until expiration. if you sell a covered call for 30 days, and you made 50% of the premium value in the first 10 days, then buy to close, but if there are only a few days until expiration, then let it run, because theta will erode the price more and more quickly.
This is awesome. Love the examples too. It would be amazing if you covered leaps and call examples too
So I’m new to selling covered calls, is it possible to sell a covered call and be able to buy back the covered’s premium 30-40% the same day?
Had a situation where I sold a covered call at 2.59 and bought it back the same day at 1.69 with a 30 day expiration.
Any feedback would be great, thanks!
I just did this recently. Yes, you can actually daytrade covered calls if you have a volitile stock that you are able to recognize a range that it is trading within. I sold and covered twice in one day, then did it the again a few days later when the stock dipped. After covering, I ended up earning more than the total premium. Then the stock actually went back up so covering was all profit. One of the things the video doesn’t explain clearly is that you do keep the premium you sold if the option expires itm and is exercised, or is exercised early. You only lose if you sell a call below your cost basis, which is why you always sell a call with a strike above the average price you paid for the stocks. This way you make a profit still and keep the premium as profit, but you only miss out on capital gains above the strike price. I would not consider this a loss. You can only lose by selling a call below your cost-basis
How do you select your expiration date?
Hey brother, I have a quick question. When buying that 100 shares. Which account do we use. is it the Short Margin account that has to be utilized for holding the shares, then do the cover call or in my Cash account then sell the cover call in my Short Margin account? Great video, I totally understand how it works now, thank you. Only thing is, I don't have a clue to which account I have to first purchase the 100 shares. Have an awesome day, warmest regards.
You can buy shares in a margin account, which will only require 50% of the share value as margin requirement in most cases. Meaning, you can buy $10,000 worth of shares for $5,000 in margin (2:1 leverage). I wouldn't recommend maxing out your margin just because you have it, though. If you have $5,000 in an account, I wouldn't buy more than $5,000 worth of shares. In a cash account, you won't be able to use any margin and will need to have 100% of the share value you're purchasing (max $5,000 share purchase with $5,000 cash in an account).
@projectfinance Thanks brother for the response. So just to recap.. I can buy from a Margin account the shares I want to hold to cover call on , not have tu use my margin short account? Warmest regards, and thanks for getting back to me.
Hi , can you buy a call deep in the money instead of buying 100 shares ? (In the covered call strategy )
Yes. But that is really a "poor mans covered call" or a diagonal spread depending on the expiration of the long calls.
@@danielharris7652 thank you for your reply , if I only day trade , not holding the options overnight , can I do it let’s say for exemple on Friday last day of expiration ? (The expiration day is the same day I’m trading ) .
@@HD-mr2cn so are you buying 100 shares on day of expiration or also selling a call against those?
@@danielharris7652no I don’t want to own any shares I just want to day trade in and out in the same day or same hour , and close the position .
@@HD-mr2cn I don't understand the logic of doing that with deep in the money long calls but it's not a covered call if you don't already own 100 shares.
Love your work! Where you been the last couple months? Also, what program are you using to present video?
What is the latest time in the day to close out a position, then jump in the next expiration link?
I was hoping to hear you talk about the scenario where we prefer to roll a covered call to a later date in the future.
Really like your vids. Just did my first option put. Not sure if or when I should close it. It will expire on 8/20. How can I tell?
Very informative video. Is there any way to automate the management of these covered calls?
I’m very new at this and answered multiple questions I had. Awesome video!
I'm glad this video was helpful! Thanks for the view and comment!
Instead of buying 100 stock, if someone buy in the money call option (premium is close to zero or only few dollars to pay), is it make any difference ? Adv. is less investment than stock...
this guy adds value. subbed
I have 3k shares iin a losing trade, should I sell covered calls against the shares?
Only if your strike price is above the price that you paid for the stock.
13:39, these premiums seems a bit off, i did check exactly your parameters and only get premium like that if you go for a much closer call like 135, although you have no IV represented and that migh scew my had 22%, any suggestion:)?
The examples were from all different time periods and market volatilities. Some of the examples were certainly during periods of high volatility and therefore more expensive option premiums compared to now.
I got some covered calls that are working for me. Still learning this stuff. Exciting
I just CANNOT grasp it.......very frustrating.
nice what strategies ru using??
Thank you for your work.
How do you close the call?
Thank you 😊.
Chris, thank you for another brilliant class. Where do I find the link for joining tasty works with your code on it? I'd like to check them out.
Kind regards
Ricardo Restrepo
One of the early assignment risk is the capital gain tax bill for taxable account you might not plan for. Depends on your situation but something should be mentioned more .
What are your thoughts on rolling the covered call? I tend to sell my calls for a shorter expiration date, normally 10 to 20 days, and if the stocks begins to climb to high, I will roll the call to a later date at a higher strike price and collect a little premium in the process.
Yup .. roll out and up if needed .. many times for a premium..
Same question I asked. My concern is that the underlying blows up and I lose my shares for cheap. Couldn’t I roll up and out until either the stock comes back down or I let my shares go for a price I’m comfortable with? Any risk in doing this?
so everytime u roll u get a new premium??
Hi Chris, thanks for the great content, I'd love to see a video just like this on managing Leaps..
can we place a call and put on an option trade at the same symbol?
yes they called spreads i think, look up bull spread
What about managing around an ex dividend date?
If the underlying price goes up quickly, why not roll the call out and sell whatever call nets you enough to buy back the original short position. Then theoretically couldn’t I do this until I sell a call at a strike I’m comfortable letting my shares go for (assuming it continues to climb)?
Many thanks Chris. Your videos are always the best !!! BTW, wouldn't vertical debit call be not needing to worry about early assignment on the short leg (when price goes up). Because you always has the long leg where you can buy back to off set the early assignment ?
Thank you for this video, insanely helpful
seems its best to write cc on low volatile stocks that don't move much.
insightful, thanks !
If I sold a cover call to receive $0.02 in premium and I had to have $150 options buying power, my question is what happens to that buying power? Did I just spend $150 just to make $2, so does that mean my account is-148 now or does that money stay in my cash balance? I'm just trying to understand what happens to the options buying power money that you have to have in order to sell a cover call
Excellent! Very helpful, I like how to show how one could manage positions under different scenarios.
You've made me sooo rich, thx
@@projectfinanceyoutube3000 im reporting you
Simply the best video on this topic so far. Thank you!
What percentage do you shoot for when you close a call? I know you said near 100% when it hit $350 and in reality the only way to hit 100% is if it expires out of the money. I know most people set a percentage before they consider closing
In the first two cases where the call value decreased, would it not be better to buy back the calls earlier, at 60-70% profit? You waited longer, made nearly 100% profit, which is ideal. But if the stock took off when you were at the 70% profit mark instead of continuing to move in your favor- decrease in price or stay the same, you could lost a 70% max profit.
I’m suggesting to apply the same strategy you are, just earlier. The waiting until near-100% profit mark as in your examples seems too late IMO, at least that’s my risk-reward analysis. Any comments would be appreciated, I’m new to options and trying to optimize my trades.
yea i think u can close early to be safe
What about selling a covered call but buying it back for a small loss and resaling for a higher strike price?
What do you think about filling a video on how the option value is determined?
Maybe a bit “mathematician”.. but i think it could help to clarify many many concepts expressed in all this tutorials you share 😊
Good content
always to the point ....with all relevant info, thank you
Thanks for always providing these gems my friend.
he is not your friend stop promoting your miserable channel already
Literally was about to go on YT to learn more about Options, let's go!!!
Hi Chris, I have been watching your videos for a while now and have subscribed to you channel. I have sent the word out in my friends network as well. I really enjoy your explanation about options strategies Well thought out and informative. Do you have live sessions where we can ask questions? Please advise. Thanks
@@projectfinanceyoutube3000 Already did subscribed, quick question, why the expiration shows Saturday on risk profile to see maximum profit? If we select Fridays which is the actual date of expiration and it did not show the maximum profit so when should we close the position? I would think before the expiration but i will not lock in full profit potential. Correct?
Very good explanation!
Is there a website that offers historical daily options pricing? Willing to pay for that service?
I’m coming with fully support you
When you say "short the call" is that the same as selling a covered call?
If you own 100 shares and short a call, you create a covered call.
Hi Chris, great video on managing thhe covered calls. I think your video is better than those from tastytrades. I am wondering what software do you use to generate those PL graphs the top and bottom one. Is there a software that let you plot a P/L graph after you have closed a position and see if you had closed it in the most optimized time instead of waiting until expiration? Manually keeping track and drawing the graph takes a lot of time. Thanks.
you are so great to explain!!!
If the shares start to fall, can I sell them even if I already sold a covered call.
To close the entire covered call you'd buy back the short call and sell your shares. You don't want to close the shares without closing the short call because you'd end up with unlimited upside risk.
Good video as usual, but I wish you would do a video on rolling covered calls to try to prolong the position as much as possible or to try to reduce the cost basis as much as possible when the stock has moved against you.
He doesn't like covered calls.
I do this all the time actually especially on IWM since it tends to trade sideways a lot.
I have done a number of rolling covered calls. Deep in the money on NVDA. Actually, over a $100 in the money. Getting ready to roll it again. Each time try to get more premium. This will be my fourth time rolling. I always roll two weeks out and keep track of ex-dividend dates. I have been assigned on ko and dvy but typically was not watching the ex dividend date. Also, be sure to watch his video on expiration. He does great work!!
@@scottreesetradinginvesting7936 I agree in the case of naked short options, but in the case of a covered call, there's no gamma risk. All of the risk lies in the long stock which has a gamma of zero. As for early assignment, that works in my favor since I immediately capture any extrinsic value remaining in the short call.
There is also chances of early assignment if stock has ex dividend even if it is slightly in the money
Correct! I should have mentioned that.
Perfect thanks Chris!
Citadel need to watch this
Sir please🙏🙏🙏🙏 give Fibonacci setting for India stock market
so in short ... worst case scenario, you get the premium?
Can Canadians trade on Tasty works?
I don't think so yet. From their website: Are you from Canada? Please email us at support@tastyworks.com to be added to our waiting list.
Assigned and taxes???
Great explanation. Your vids are getting better all the time. Thank you very much!
Thank you! I spend so much time editing some of these videos that by the end of hearing it over and over again I feel like it’s not good haha so thanks for the feedback.
Chris, what do u think about trading 1-2 weeks CC instead of 30-45 DTE, although i get less premium, it gives u the flexibility to close or roll the CC for credit in the event that your CC gets tested. Also, theta decay would be the highest in the final week of the option
Yes weekly option has higher theta. But require more time to manage than monthly option.
I like 20 - 30 days out.
Your shares can get called away at anytime when it’s above your strike so holding and hoping it falls below your strike by expiration doesn’t always work. The contract can be exercised buy the buyer at any point when the stock price goes above the strike price you have. I have had this happen to me
Very seldom though, you need to pick better stocks and aim for a lower delta.
Also, instead of going for maximum profit, go for maximum probability of a successful trade. The profits will flow.
It's difficult to analyze these scenarios unless we know if the investor is wanting to own/keep the shares. Without this info it's not ez to determine what strategy to employ.
IMO the only real risk is to the downside. One can't lose a dime even if exercised on the upside.
But if investor wants to keep the stock then roll up.
Even in scenario #1 with stock going down the investor could have rolled down to capture more premium. But again it's difficult to know what to do without knowledge of intentions of the investor.
Hi Chris, could you make a broken wing butterfly video?
Great video once again.
i think it is depends on the EV and dividend
Looking so much better without the glasses!
Haha thank you! You can’t see my eyes with the glasses because they are super reflective
is shorting the 140 covered call the same as buying a put? I'm confused.
Selling a covered call is shorting
Oh man, im so guilty for not closing calls that are near 100% profit haha. I need to take that more seriously
Nine people bought naked AAPL calls at $135.
The best.
Another great video. Your videos have been a godsend for me! Making good monthly income now with selling options. Your video on expiration has changed how I trade!
what strategies ru using?? any suggestions??
@@Eastbaypisces Thanks. I use cash secured puts, covered calls and vertical put credit spreads. Another RUclips suggested rolling a position from one stock to another. Primarily with puts. Thinking of doing this with one of my positions that is way deep in the money that I have lost confidence in. Have you ever tried this?
@@jimadams8667 what are cash secured puts n credit spreads?
Great video. But you said it clearly. Selling or getting assigned, would not be a bad thing cause it’s your max profit. I would enter trades with no emotion or attachment to my shares. I could care less about losing them. I actually want to get assigned every single time cause I would be selling (one strike above ATM) to collect bigger premium. I have a tax free account where I would buy more shares to hold. Index funds and dividend payers. The options is just my weekly income. Don’t care about the shares. Just my take.
Well said
Question: If your shares get assigned, dont you lose the value (the cost you paid for your shares)? Typically, the premium from the option is less than the cost of your shares. You would be losing money in that case. Am I understanding those scenarios correctly?
@@emmanuel4720 if your shares are assigned, you reached max profit. You lose on opportunity cost if the shares rocket up. Consider this, you buy 100 shares at $18 per. You wrote the covered call for $20 a share. Premium is say $70 for the contract. A week later, the shares hit $21. You collected $70 up front and $200 for the shares being assigned. Total of $270 and original capital back. How are you losing money? You lost the extra dollar per share on opportunity cost. But made $270. That’s a win in my books. It’s all about cost basis.
Didn't know that Billy Corgan from smashing pumpkins taught options!
Lmao 😂
Capped gains, that ok
CHICAGO BABY
Skyline too beautiful
So I was under the impression that when you sell CC you collect your premiums and that's it, didn't know that you can lose money depending on the price movement of the stock. (Not counting the losses of the shares that we hold)
You technically keep the premium, but that doesn’t mean you can’t see a loss on the contract. The loss on the call contract as the stock price increases is what causes the CC to have capped upside. At a certain point, the short call will lose $100 for each $1 increase in the stock price while the shares will gain $100 (no change in P/L as described by the risk graph).
But you dont know what direction the stock was going to go?
right
I don't understand why "losing your shares" is so often presented as a bad thing. If you start planning your strategy as this being the goal, there is far less to manage. You get the premium and the gains above your entry price to the strike. I guess people do this with companies that they are in love with? Not sure. Just rinse and repeat. Plenty of opportunities out there.
Exactly.
Really? Think about if you held APPLE for years and you were sitting on a 100k capital gain. By letting your shares go you are liable for 15k in capital gains. I’d like to avoid that so I roll up and out to avoid assignment.
@@cb24955really? Stocks don’t just go up. They come down as well. He could just wait for a good entry again and resell the calls and collect premium. Much more profitable this way.
U sound exactly like Marko finance or whatever his name is
Never heard that one before. Marko is a great guy though!
He looks way too young to have this much knowledge
Haha I’m 28! I’ve been studying this stuff and actively involved with options pretty much full time for 8 years so it’s just experience/exposure. Thanks for watching/commenting!
🤦🏾♂️
Can you explain what is exactly wrong with buying a stock for 125 and selling for 135 ? ... where`s the loss ? ... you keep the premium and make $$$ on the stock price right ? ... only an idiot would set a strike price below the stock purchase price, right ?
That's exactly what I was thinking as well. Maybe the loss he talks about is the potential profit we miss.