Hi Brad, I basically have two queries, hope you can help me. 1. I have a 5.5k shares of company lucid which is trading at 50$ today and I sold Jan 23 95$ strike calls and collected nice premium. I am k to sell entire my positions if this goes above 100$ anytime. Is there any loophole in this strategy?. If the stock spike to 100$ in the near term, I can always roll back down my options and sell my stocks right?. 2. I know a company x which is trading today at $12 has almost limited downside and I want buy this stock and sell Jan 24 15$ leap calls for 8$ premium. I am OK to sell this stock above 15$ anytime. Again, does this strategy makes sense?
-Buying call instead of selling call -Understanding strike price and cost basis -Expiration more than 30-45 days out -Delta as probability of profit -Implied volatility -Dates of ex-div/earnings
My biggest rookie mistake with covered calls was 1) using a stock that I liked and didn't really want to get rid of and 2) being an idiot and selling at a low strike price to get a big premium, and 3) selling the calls too far out date wise. Best thing to do is 1) Buy 100 shares of a popular weekly stock 2) make the strike price far enough that it is unlikely that it get hit, and if it does, you will make a ton of money, and 3) use a stock that you won't be salty about losing.
@@cheezet100fyi Yea I definitely would choose a different stock man... That sounds like a WallStreetBets move lmao not a good idea to do that with a meme stock
Excellent video Brad. A recent mistake I made was rushing to write the covered call because it was near the end of a trading day. The price on my volatile stock was dropping dramatically one day. I decided to write the covered call that would expire the next day. I forgot to verify my strike price was above my basis and wrote the call below my basis. I made about $300 premium for the 1 day, but the price of the stock shot up above my strike price the next day. The contract was assigned. I ended up losing on my total investment. 3 potential mistakes: I wrote the covered call on a day the stock was falling, I wrote a covered call on a volatile stock and I failed to go through my checklist and verify my strike price was above my basis because I was rushing. However, I ended up acquiring the stock again a week later by buying the stock below my original basis. Do not get mad over a mistake you make, you can recover in different ways. Chalk it up as real life experience.
@@JR-wj9it I think but not sure is that a wash sale only applies when there is a loss in value and not a capital gain. For example someone selling a stock at a loss to get the loss to offset other gains for tax purposes and then buying it back. I don't think wash sales work when a gain is involved and the stock is bought back soon afterward. After all the rule was made by the IRS and they want their share of gains now.
I wish I had found your channel two years back. I honestly think there is something magical about your teaching style and I wish you all the success in the world.
For my one account, my goal is to be back into cash by the weekend. In other words, I want any covered call that I have to be exercised. Buy stock early in the week, sell in the money covered call with at least 1% premium on the strike price (e.g. premium collected is at least 1% greater than my cost for the stock over purchase). that way, i don't care about any weekend news, etc, that may hit. But, you want to pick tickers that are likely to go up, stay the same, or not come back down below your strike price that week. So, it does take some research, charting, etc. For another account, sell cash covered puts, roll them as needed if my strike is attacked, but if assigned, turn around for cash covered calls at the same strike price .. this one has been the most regular method of making money ... option sellers are the ones in control. (And, if you are looking to buy something for the long term anyway, why not use cash covered puts for that ... select the price you are willing to pay and get paid for buying at that price (e.g. premium))
I see a lot of the same issues. One I don't need to deal with is I do all my option selling in a roth ira so don't need to worry about short term gains.
I feel you can do both. The Roth will be tax free at 59.5 but you can only contribute 6,000 a year. So if you have more capital to invest beyond 6k you may want to consider investing in a taxable account as well.
It's so funny you called out a mistake that I just made recently when writing my second covered call ever. I did all my research like you said and accidentally bought the calls instead of writing them. I was so mad at the time but after watching this it makes me feel better that other people make the same mistake.
I haven't start trading yet because i'm too scared to make mistakes. This video is definitely very enlightening and I would have made so much mistake if I didn't watch this. Thank you Brad!
I just closed my first ever trade. It was a cash covered put. I made about 70% return. I told a mate “I bottled it and sold early” however watching this has reinforced I made 70% and not lost 30% 👍
Great summary Brad !.. one of the mistakes resonated with me: avoid selling cov calls on red days: I was doing it on red days with the fear that the stock might go lower in following days thus pushing the premiums lower. But gradually realized that one green day does a lot more good to an option than the amount of harm that many past red days do.
You don't sell covered calls on red days, you buy to close to save your position if you still truly believe in it. Make sure you only sell contacts on stock you will profit on at strike price!
ive gotten lazy with my covered calls/ puts. i almost never buy to close. i just choose a price that ill be happy with selling/buying my shares at and if i get assigned, then im ok with it. for example ive been writing weekly calls for AMC for $15 strike. got really close to assignment but my cost basis is $8 a share ( probably significantly less since ive been collecting $10 a week on premiums for a while now but im lazy in figuring that out as well) the premiums like you said are just a nice bonus, my main goal is hoping the price will hit my strike so i can do puts on said stock and have money to expand to other stocks. so i just pick a price thats 30% from the current price and just go with it. NOT FINANCIAL ADVICE, THIS IS JUST WHAT I DO. doing this has been way less stressful for me, yeah i know its not optimal but i literally just check my folder on monday or tuesday to write my calls/puts, then check friday to see if im getting assigned or not. then just repeat the process. 5 maybe 10 minutes a week for a passive income, sometimes less if some of the options are bi weekly.
@@jamiedynasaur5514 this was 2 weeks ago lmao obviously I'm not still writing calls for that price and even if I was who cares? I still more then doubled my investment :P
@@nfekeskxnxngntnrkdkcn627 lol i wrote a covered call on amc on the $18 strike expiring today, a couple days ago and that fucker hit yesterday, and i quickly took a loss and bout to close for $100 because i knew amc is gonna keep going up, but in the morning today, i sold another covered call when the price was getting shorted down and got $203 in credit :D not bad at all
Dude, you have some great material here. I have some knowledge but continue to look for nuggets by watching video's regularly. Someone starting out would do well to watch your stuff. I sit on the couch at night and watch youtube so I had to come to my computer to leave a comment, that doesn't happen very often. Last thing, when our are enjoying Jefferson Ocean, don't taint the perfection with cubes. I did the same thing when I started drinking bourbon, when you are not used to a strong drink you want to thin it out a tad but trust me on this, you will enjoy it more the way they intended it to be imbibed. Move to a single cube and get adjusted then move to neat. There is no comparison. That would be like watering down your chili because it is too hot, not that I love very hot food, just going for a good analogy. Sorry for getting off track, but I will be watching more and liking all I watch!
Thank you for pointing out how to close out (buying back) the covered call at the end of this video. Many videos out there show how to start the CC but not how to finish it. Very valuable information, thank you.
Ohhh man lmfao 🤣 😂 I did that once on 5 contracts!!!! And of course lame ass robinhood wanted like $10 less per contract than what I paid but than that shit went up! Hahahahahaaaa last time I made that mistake but I came out +$150!
Happened to me, I expected a Tesla bounce so I opened a credit put spread, accidentally opened a debit. It bounced, I started off on a terrible position, but I also expected a fall afterward. It fell. A lot. Made some money on that.
Been doing this in my Roth IRA for years, so tax-free. When I start a new position using the cc strategy, I’ll buy 110 or 120 shares, so if I’m assigned the fomo isn’t so bad ( I still have have 10 or 20 shares that can continue the ride up. Btw, there are times when you get assigned, but the cc strategy was Still more profitable than owning the stock.
@@CategoricalImperative How long have you been doing covered calls options? Can someone consistently make money every year? It is derivatives after all
I bought 100 shares of cei today for 1.66 I sold $1 call 8 days out for 1.05. within 30 minutes I was assigned. So I did it 3 more times. 20% does that work very often.
Thank you, Brad! I love your videos. You have a way of translating the math behind the options in a way that is easily understandable without disregarding it. I think it's crazy how much physics applies to the market.
Good video. Delta explanation is a smidge off. Delta can be used to estimate the probability that the option will _expire_ at that strike, so 0.30 delta is 30% probability at expiration, but the probability of the stock _touching_ that strike at _any_ time between now and the expiration is actually 2x delta, so there's a 60% chance you'll see it touch that price. Granted just because a stock touches your strike doesn't mean you'll be assigned. Hold or roll.
I just sold a 45$ call on Nio at 30 days with a basis of $39. The stock was trading at $37 and heading down when I did this. My objective was to collect a little premium on a long position but be perfectly willing to get assigned at $45 and make my $6.00 profit plus premium. Been holding this for so long without much profit that I am willing to dump it. Doesn't this make sense?
I had a question, so for covered calls, it goes off of your stock average price not the actual current price of the stock. For example if my average cost price of the stock is $50 but the current price is $55, the covered call will go off of my average price correct?
Is it a good strategic move to make if I sell a covered call with a premium of 1.22 and after 5 days, the premium drop to 0.2, then I buy the call to close the position and consequently sell another covered call at a lower strike price to just receive another premium instantly?
i remember some one trying to tell me i didn't know what i was talking about when i told them i want to be exercised. my man explained it perfectly at 4:19
Good stuff, only thing is people need to consider the const of getting in/out of these trades. Buying to close adds to your cost for the trade so might not be worth it
the #1 prob you mentioned about buying instead of selling a call is something I noticed happens much more on a phone than a computer/laptop. Must be the smaller screen and touch screen scrolling vs a mouse that you can 100% aim for what you want. I have noticed similar probs along these lines like a different strike price than what I wanted or sometimes a different expiration period. Be careful using a phone to trade, your finger can accidentally scroll something you don't want.
Nice video thanks. Quick question.. You mention that that you like to close at 75% profit level and one on the main reasons is that you may not be able to close due to lack of liquidity as you come closer to expiry.. My question is.. why not let it expire worthless that way you do not have to worry about liquidity or paying brokerage commission..
You can definitely do that. After being burned a few times on contracts "I knew would expire worthless" go south on Friday just isn't worth it to me anymore. And I dont pay brokerage commission so that is a non issue
I still don’t get the whole tax burden thing on your long term capital gains. You’re gonna sell the stock eventually so you’re gonna have to pay those taxes at some point. The only difference in my eyes is if your tax bracket changes but if your income is increasing over time then you’re gonna end up in a higher bracket.
You are so correct about being mindful about the percentage of the premium relative to the collateral on a CSP or relative to your cost basis on a CC! I feel that most people overlook this.
I have been making bank on JNJ CC's for months. Somedays I Sell to Open and Buy to close in the same day. The swings have been so predictable until recent earnings, but the trend seems to be continuing, just at a lower strike price.
Really good video! I would add that people need to take into consideration the trading cost. If each covered call cost you $11, it eats up at your profit (Same if you close early).
I can see why the Wheel strategy wouldn’t be worth it on SPY. What about a LEAPS on SPY and doing a PMCC? You would only need to put up about 1/4 the cost compared to buy the 100 shares. So selling covered calls will have a better ROI.
I feel like just by selling covered calls with an expiration of 30-45 days and by rolling the position after 3 weeks, we can avoid the risk of assignment and stack numbers over time
I sold covered calls with high premium, the stock went up a crazy amount.... I don't want them to get assigned. Can I keep rolling my call? My stock went up over 90% in a night.
Guilty as charged as far as buying a call instead of selling one and then you have the day trade restriction on top of it and have to wait another day! I know this is a CC video but I’d love to hear more of your thoughts on rolling POCC when you have to do it at a loss. Do you also go for a higher delta on the short leg next time or stand your ground? I’m just getting started with PMCC but I’d love to hear more of your thoughts on rolling them when you have to at a loss.
Eek ... On your discussion about covering @ 75%, I need to remind you that stocks are modeled according to exponential Brownian motion w/ drift, and when doing weekly options, the Brownian motion is a factor even though it's expected value is 0. When covering a call @ 75% profit, you will tend to hold it longer for the same fixed profit % than someone holding it to say 95% profit due to the decay curve steepening at the end. This means the variance of the Brownian motion over the time period you hold the call will be unnecessarily large due to your choice to cover early (recall the variance of B(t-s) is t-s). For this reason, if the stock's options have enough liquidity, I'd recommend not closing it this early.
great analysis for the rocket scientist. In laymans terms the theta decay increases the closer it gets to expiration. You might have to hold the option for three weeks to get the 75% but only two more days to get another 20%. I tend to hold the option until close to expiration. Anything that has a realistic chance to get assigned I roll into next week. If not then I let it expire worthless and get 100%.
@@michaelmccusker7265 Well, I've since backtested my assertion on multiple stocks using the Black-Scholes model for historical option price (so one limitation is this is theoretical, not actual) and ... it actually showed a small local maximum in return when buying back at 75-80% return. I was shocked by this. I tested this not only for multiple stocks, but for multiple values for %OTM strike. I have the graph if anyone's interested in the results.
@@PadreDProductions Yes and no. You can look at my results graph here: Protocol: HTTPS Host: Dropbox File Path: /s/n7xz7cqmqsm7wpk/ File Name: Screenshot%202021-11-12%2002.33.38.png?dl=0 My apologies for warping the URL by breaking up the pieces, but RUclips wouldn't let the comment go through otherwise. Hopefully, if anyone's interested, they can put it back together. It's important to understand the limitations of my backtest. 1) Historical options pricing was approximated by the Black Scholes Model, where the risk-free interest rate was assumed to be constant. 2) This backtest was only done on one stock (AMD) and the results may be different on other underlying assets. 3) I only trigger a buy-back using closing options prices, not intraday as it would be with an open limit order in a forward test. With these limitations in mind, the results seem to confirm the author's claim, yes.
The worst is selling a covered call and being tied to the call and the stock rallies past the strike and you can’t sell your shares because you’re tied to the covered call then the stock price tanks below your cost basis. But at least you’ll collect premium after that roller coaster lol.
@@Eastbaypisces when you sell a covered call you are agreeing to have your shares called away at that strike price (your short call) by expiration. If the stock rallies past your strike price your short call becomes very valuable. Your profits are capped on your 100 shares to that short call strike and your call that you sold short is realized, meaning you already got paid for selling the (covered) call. So unless you have level 4 options you can’t sell your shares without buying back that short call bc that would create a naked call. You could always sell a covered call and buy a lower delta super cheap call in case that does happen IMO. Doing that takes away from your realized short call premium but it catches any huge upside moves.
@@Eastbaypisces a covered call essentially handcuffs your 100 shares to the sold call strike price until you either 1) buy back the sold call or 2) let it expire worthless for maximum realized profits bc the stock never went past that strike price.
@@dansage3665 so if i got 100 shares(already own) of SKYT, i paid 6.99, its trading at 14.99 and i sell the call for say 20.00premium and put a strike at 19 w exp next week and next week the stock only goes up to 16/share i keep the premium once i buy back the call (i get the difference from that the share price and strike price) right? so u mean tied to it if the option gets assigned? if i got assigned then i would b selling the stock at the strike price right??
@@Eastbaypisces sorry im not gonna give a class on covered calls on a RUclips comment thread ;) if you have 100 shares you can sell calls above your stock average as long as you’re ok selling the stock if it goes above your strike
I think selling monthly provides better opportunity. For instance, say I sell weekly and I’m assigned each week, 4 times in one month, between calls and puts, I’ll be losing 4 weekends or 8 days of the month without capturing premium because if I’m assigned on Fridays, I wouldn’t be able to open new contracts until Monday therefore giving up time decay from the sat and Sundays before. I’d rather sell a monthly for a buffer like you said, and plan to close in a week or two if price goes against me. If I can’t close cuz I’m ITM then I’ll let it expire and get taken away in four weeks for 4 times the premium that a weekly would give me.
To clarify, PMCC exit strategy - if I get assigned and don’t have buying power to buy the 100 shares at my strike price, do I get the money from the assignment before I exercise? Does the brokerage do it automatically? Do I go to jail 😭😬
I’m not going to lie. This is the exact philosophy I use. I’ve been trading since 2016 and so far, this is what I’ve learnt. In a stable market, 2% monthly works for me, in volatile and bearish market like now, 1.5% a month is fine with me.
@@BradFinn that being said though. I did think Delta meant the percentage change in option value for every one dollar change in stock price, not percentage of whether stock price will hit strike price or not. So for instance, a strike price with a delta of .3 (30%) means for every one dollar change in stock price up or down, the option value will move 30c up or down. This is the second place I’ve seen delta defined like this. But the old school guys I learnt from defined it as I defined it earlier. Am I missing something?
My guy, I love your communication style in your videos. You're great for newbies like me trying to understand the wheel strategy and the basic mechanics of puts and options. My question: I've got a lot of shares in JEPI. (+2400) and my cost basis is 56.00. It's trading these days at 54.10 give or take. Do I need to get my cost basis down before trying puts with JEPI? Again I own all these shares and don't know how to get started with my 1st option or put. Please help! 🙏 Thank you!
Thanks so much Brad for the great video. May I check if I want to close the sell puts option before expiration date with minimum loss, how can I do it? Thanks
I sold covered calls by accident (wanted to buy calls while actually holding stock), I thought I could only buy options and do covered puts on TD. Anyways, I sold them right away and missed out on a few grand! Oh well, now I sell CC's all the time
Great content! If you bought a stock at $40 but it is now trading at $30. At what strike and expiry would you sell a cover call? Would you roll it if it gets ITM say you sold a $32 strike.?
Yeah, about flat. I put together an iron condor on Berkshire because it was flat for days and a few days later, it decided to go up 6%- Doh!!!! Lesson learned, if a normally "flat" stock has been flat for some time, don't expect it to stay that way for a lot longer.
I'm having trouble understanding options because paper trading is delayed and not working like it does in real world. What would you recommend I do to just test the waters? What kind of stock can I play with on one option to see how this works?
Your videos are the best on RUclips explaining options. Question I have my cost basis set to spec ID on Vanguard if I get assigned will it give me the choice of which block of stocks to sell? I have ABBV at all different cost basis from 60 to 111.00. Or should I go in and choose First in first out or Highest in first out. I sold my first covered call after watching your videos over and over 2 × 142 strike price expires 2/4 using the criteria explained. Thank you
I appreciate the kind words Peter I answer questions on my live stream every Sunday night in the chat as well as voicemail www.speakpipe.com/BradFinnLive You can also find me in the discord. Cheers
Kid was bothering me one day when I was trying to sell an OTM call (I typically sell a ton of puts). A couple days later as the option price was increasing as share price dropped and I was like huh, I then realized I sold an ITM put. Was really painful/expensive mistake. But I think when you realize you made a mistake, BTC it immediately vs trying to "fix it". At least that is always what I do... You trade enough, trust me it happens!
Sell to open with a covered call. Great money making strategy because you get to sell the stock and receive the premium which in the somewhat improbable event that the stock is above the strike price just a little you might get assigned to sell but it's like you gain on selling for profit and premium. So say you sell for $44 strike and premium is $5.00 you basically get to sell the stock for $4900 or more like $49 a share. Great profits.
Can you explain what happens when you get assigned. Let’s say I sell a $75 call for $2.00 premium and the stock goes to $90 what happens and what is my loss?? I know the contract is going to be worth $15 at expiry but does that mean I lose $15 if I just get assigned.
I really appreciate the video it was great. Any reason you can't just let the cover call expire? You still get your premium right? Is there any benefit to buy to close it its not close to hitting strike price. I'm new to covered calls and only done a few times
I don't understand. Wont we eventually have to pay taxes whether holding long or short? Are the taxes higher on day trading compared to holding a stock 5 years then selling?
Great video! You have the knack for teaching. Something I'm not clear on, say I purchase 100 shares of..whatever. if I sell a call that ends up ITM, I get assigned and I have to sell my 100 shares at the strike price. Is that money automatically transferred into my account by my brokerage? Thanks.
crazy thought for me I don't mind getting assigned Why? I pick a strike price that gives me the 5-10% appreciation I want to earn on the stock. If the stock moves within a defined range, I'll buy back in close to my original cost basis.
Made a bad mistake this week.. sold covered call on tesla and it rallied like crazy and now my far OTM is close to ITM and sweating bullets I'm about to get assigned. Still got a few weeks.. but may need to buy back to close this out now at a big loss.
Wanted to take a minute to say that you are great. I really appreciate the way you do things. Thank you for contributing. And I spit out my own drink when I saw how little you had left in your glass at the end of the video!
So what your saying, for figuring out a percentage per return, is to calculate premium recieved divided by capital towards collateral?? So if I put up 5000 for collateral and receive $50 in premium, that would calculate to be 50/5000 = .01 or 1% return on investment? I should reach towards how much? 10%? 20%? Per month? Per year? I don’t see how that’s possible per month. Ty
I've found I am about 50% assigned versus expiration on 30 day covered calls. The concern I have is when there is still time until expiration maybe 2 weeks and the underlying (CRM in this case) is significantly over my strike price do I roll, close or wait for assignment? The answer might be it depends? I already secured a nice profit more than 100% annually if extrapolated over 12 months.
Hey Brad, I own couple of thousand shares of Blackberry at $14 a share, stock is trending around $12 right now and I am not married to it in fact I want to hedge out of the stock. Do you recommend selling covered calls for strike price of $14? I can live with just the premium if I get assigned. Just to see if I understand this correctly, in order to keep the premium I want the price of stock to stay below or around $12 but not over $14 right?
A study done by tastytrade shows that cutting losses is WAY more important than cutting profits. Generally I’ll cut losses at 50% and I have yet to regret that when looking back after the trade would have finished.
Wheel Strategey Guide and Journal amzn.to/3qL2K82
*Covered Call Tutorial* ruclips.net/video/KEwqiSo1J5E/видео.html
*Poor Man's Covered Call* ruclips.net/video/JDcBrrT_Kws/видео.html
FREE Mini Course On Trading Options: ruclips.net/video/wDFj310VJlM/видео.html
Can you make a video to see if a option has a big premium in it? Basically I want a easy way to see if a option is cheap or expensive. Thanks
Hi Brad, I basically have two queries, hope you can help me. 1. I have a 5.5k shares of company lucid which is trading at 50$ today and I sold Jan 23 95$ strike calls and collected nice premium. I am k to sell entire my positions if this goes above 100$ anytime. Is there any loophole in this strategy?. If the stock spike to 100$ in the near term, I can always roll back down my options and sell my stocks right?.
2. I know a company x which is trading today at $12 has almost limited downside and I want buy this stock and sell Jan 24 15$ leap calls for 8$ premium. I am OK to sell this stock above 15$ anytime. Again, does this strategy makes sense?
-Buying call instead of selling call
-Understanding strike price and cost basis
-Expiration more than 30-45 days out
-Delta as probability of profit
-Implied volatility
-Dates of ex-div/earnings
Chad
My biggest rookie mistake with covered calls was 1) using a stock that I liked and didn't really want to get rid of and 2) being an idiot and selling at a low strike price to get a big premium, and 3) selling the calls too far out date wise. Best thing to do is 1) Buy 100 shares of a popular weekly stock 2) make the strike price far enough that it is unlikely that it get hit, and if it does, you will make a ton of money, and 3) use a stock that you won't be salty about losing.
I'm doing this with AMC and premiums are nice, but doing $25 above strike price, but man if the squeeze happens ima be so mad LOL
@@cheezet100fyi I would never do covered calls with a meme stock. Just my opinion. I might have to look further into it to say for sure.
^ This...and only This
you can roll your covered call up and out to avoiding it being assigned
@@cheezet100fyi Yea I definitely would choose a different stock man... That sounds like a WallStreetBets move lmao not a good idea to do that with a meme stock
Excellent video Brad. A recent mistake I made was rushing to write the covered call because it was near the end of a trading day. The price on my volatile stock was dropping dramatically one day. I decided to write the covered call that would expire the next day. I forgot to verify my strike price was above my basis and wrote the call below my basis. I made about $300 premium for the 1 day, but the price of the stock shot up above my strike price the next day. The contract was assigned. I ended up losing on my total investment. 3 potential mistakes: I wrote the covered call on a day the stock was falling, I wrote a covered call on a volatile stock and I failed to go through my checklist and verify my strike price was above my basis because I was rushing. However, I ended up acquiring the stock again a week later by buying the stock below my original basis. Do not get mad over a mistake you make, you can recover in different ways. Chalk it up as real life experience.
Same here bro..
Thanks for this!! Am new so hearing about possible mistakes helps a lot!!!
Thanks for sharing Jim.
If the contract was assigned and you sold, wouldn’t buying it the week after be against wash out rule?
@@JR-wj9it I think but not sure is that a wash sale only applies when there is a loss in value and not a capital gain. For example someone selling a stock at a loss to get the loss to offset other gains for tax purposes and then buying it back. I don't think wash sales work when a gain is involved and the stock is bought back soon afterward. After all the rule was made by the IRS and they want their share of gains now.
I wish I had found your channel two years back.
I honestly think there is something magical about your teaching style and I wish you all the success in the world.
Wow, thank you!
Thanks
You’re welcome
For my one account, my goal is to be back into cash by the weekend. In other words, I want any covered call that I have to be exercised. Buy stock early in the week, sell in the money covered call with at least 1% premium on the strike price (e.g. premium collected is at least 1% greater than my cost for the stock over purchase). that way, i don't care about any weekend news, etc, that may hit. But, you want to pick tickers that are likely to go up, stay the same, or not come back down below your strike price that week. So, it does take some research, charting, etc. For another account, sell cash covered puts, roll them as needed if my strike is attacked, but if assigned, turn around for cash covered calls at the same strike price .. this one has been the most regular method of making money ... option sellers are the ones in control. (And, if you are looking to buy something for the long term anyway, why not use cash covered puts for that ... select the price you are willing to pay and get paid for buying at that price (e.g. premium))
I see a lot of the same issues. One I don't need to deal with is I do all my option selling in a roth ira so don't need to worry about short term gains.
I feel you can do both. The Roth will be tax free at 59.5 but you can only contribute 6,000 a year. So if you have more capital to invest beyond 6k you may want to consider investing in a taxable account as well.
@@edmandell3064 yes me and my wife max out the roth, 1 wheel my wife buy and hold. then 401k up to the match on index funds
@@edmandell3064 We don’t have that problem. Can’t come up with $6,000 extra anyway!
@@greggalexander5663 hey that's ok . Just do as much as you can. It will grow and compound for you over time.
Don't use Market Buy Order when you make covered call , stick to limit buy, because you'll get a very low limit price
It's so funny you called out a mistake that I just made recently when writing my second covered call ever. I did all my research like you said and accidentally bought the calls instead of writing them. I was so mad at the time but after watching this it makes me feel better that other people make the same mistake.
I haven't start trading yet because i'm too scared to make mistakes. This video is definitely very enlightening and I would have made so much mistake if I didn't watch this. Thank you Brad!
You’re very welcome. Keep learning. We’ll be here when ur ready!!
trade small and be fearless. It may cost you a bit but that's ok.
You will make mistakes.. Embrace it. Learning to lose is the most important thing about being a trader. We make mistakes and mad trade all the time.
I just closed my first ever trade. It was a cash covered put. I made about 70% return. I told a mate “I bottled it and sold early” however watching this has reinforced I made 70% and not lost 30% 👍
Hell yeah
Your video's are so helpful! I can actually listen before I get too bored like other Option video's.
Cheers! Thank you Mark!
Sold my first covered call. Found this VERY HELPFUL. THANK YOU!
Cheers. Good luck
Great summary Brad !.. one of the mistakes resonated with me: avoid selling cov calls on red days: I was doing it on red days with the fear that the stock might go lower in following days thus pushing the premiums lower. But gradually realized that one green day does a lot more good to an option than the amount of harm that many past red days do.
Thanks so much for sharing
You don't sell covered calls on red days, you buy to close to save your position if you still truly believe in it. Make sure you only sell contacts on stock you will profit on at strike price!
Thank you
@@JB-zh1sel
ive gotten lazy with my covered calls/ puts. i almost never buy to close. i just choose a price that ill be happy with selling/buying my shares at and if i get assigned, then im ok with it. for example ive been writing weekly calls for AMC for $15 strike. got really close to assignment but my cost basis is $8 a share ( probably significantly less since ive been collecting $10 a week on premiums for a while now but im lazy in figuring that out as well) the premiums like you said are just a nice bonus, my main goal is hoping the price will hit my strike so i can do puts on said stock and have money to expand to other stocks. so i just pick a price thats 30% from the current price and just go with it. NOT FINANCIAL ADVICE, THIS IS JUST WHAT I DO. doing this has been way less stressful for me, yeah i know its not optimal but i literally just check my folder on monday or tuesday to write my calls/puts, then check friday to see if im getting assigned or not. then just repeat the process. 5 maybe 10 minutes a week for a passive income, sometimes less if some of the options are bi weekly.
This aged well
@@jamiedynasaur5514 this was 2 weeks ago lmao obviously I'm not still writing calls for that price and even if I was who cares? I still more then doubled my investment :P
@@nfekeskxnxngntnrkdkcn627 lol i wrote a covered call on amc on the $18 strike expiring today, a couple days ago and that fucker hit yesterday, and i quickly took a loss and bout to close for $100 because i knew amc is gonna keep going up, but in the morning today, i sold another covered call when the price was getting shorted down and got $203 in credit :D not bad at all
I bought a Jan 2023 Put on AMC. Ain't no one going to that damn movie theatre
I sold 8 covered AMC calls for $15 strike literally days before it went up to $75. FML
Been selling calls for about 6 months - and have expereincec the pitfalls mentioned. Good video !
Thank you so much. Good luck
Dude, you have some great material here. I have some knowledge but continue to look for nuggets by watching video's regularly. Someone starting out would do well to watch your stuff. I sit on the couch at night and watch youtube so I had to come to my computer to leave a comment, that doesn't happen very often. Last thing, when our are enjoying Jefferson Ocean, don't taint the perfection with cubes. I did the same thing when I started drinking bourbon, when you are not used to a strong drink you want to thin it out a tad but trust me on this, you will enjoy it more the way they intended it to be imbibed. Move to a single cube and get adjusted then move to neat. There is no comparison. That would be like watering down your chili because it is too hot, not that I love very hot food, just going for a good analogy. Sorry for getting off track, but I will be watching more and liking all I watch!
🤙🏻
16:30 'That's "Money in the bank, Shawty what's your drink" and we keep it moving' LMAOO that was so great I almost missed it
haha.. always try and throw some gold in there
I went straight to the comments when I heard him say that. That made me actually lol.
Man, I had to stop and go listen to that song real quick, it's been years! lmao
Bro this video clarified some things for me that i've been trying to figure out as a noob - THANKS!
Awesome. Thank you. Please give it a like if you could do more people see it
Thank you for pointing out how to close out (buying back) the covered call at the end of this video. Many videos out there show how to start the CC but not how to finish it. Very valuable information, thank you.
You’re welcome bud. Thanks for the comment
write the call on a green day is something i learned after BB went up. I sold on a Monday @.15; Tuesday it was over 3$ a contract.
Nice
BB is my go to. First CC I sold was 2$ for a strike of 20$. Man I wish that call had been assigned... :-)
I bought instead of sold once, the stock continued to rally and I ended up making cash. Whoops!
Nice.. better to be lucky than good sometimes
@@financeabcs Believe me, more than has been cancelled out by my "purposely losing money" hah!
Ohhh man lmfao 🤣 😂
I did that once on 5 contracts!!!! And of course lame ass robinhood wanted like $10 less per contract than what I paid but than that shit went up! Hahahahahaaaa last time I made that mistake but I came out +$150!
Happened to me, I expected a Tesla bounce so I opened a credit put spread, accidentally opened a debit.
It bounced, I started off on a terrible position, but I also expected a fall afterward.
It fell. A lot. Made some money on that.
🤣 I love that!
Been doing this in my Roth IRA for years, so tax-free. When I start a new position using the cc strategy, I’ll buy 110 or 120 shares, so if I’m assigned the fomo isn’t so bad ( I still have have 10 or 20 shares that can continue the ride up. Btw, there are times when you get assigned, but the cc strategy was Still more profitable than owning the stock.
cool
I did not know that Roth IRA allows to trade options. Can you consistently make money monthly using writing covered calls options?
@@louis20122 It only allows 'covered' or cash secured trades. So, no naked calls or puts iron condors, credit spreads, etc.
@@CategoricalImperative How long have you been doing covered calls options? Can someone consistently make money every year? It is derivatives after all
@@louis20122 On and off for about 10 years. I like to compound with weeklies, but it's a lot of management.
I bought 100 shares of cei today for 1.66 I sold $1 call 8 days out for 1.05. within 30 minutes I was assigned. So I did it 3 more times. 20% does that work very often.
This is the most comprehensive covered call option video that I have viewed! Thank you
You’re welcome
Thank you, Brad! I love your videos. You have a way of translating the math behind the options in a way that is easily understandable without disregarding it. I think it's crazy how much physics applies to the market.
Thank you so much for the kind words
Good video. Delta explanation is a smidge off. Delta can be used to estimate the probability that the option will _expire_ at that strike, so 0.30 delta is 30% probability at expiration, but the probability of the stock _touching_ that strike at _any_ time between now and the expiration is actually 2x delta, so there's a 60% chance you'll see it touch that price. Granted just because a stock touches your strike doesn't mean you'll be assigned. Hold or roll.
Thanks for sharing
Delta in options is how much the options price will move to the underlining asset.. great video though esp. cover the call at 75%
thanks for the feedback
Hey man- Great video! Very clear and informative. Thank you!!
You’re welcome David
Killer vid bro, subscribed, thumbs up, keep em coming I appreciate all the info
Cheers
I just sold a 45$ call on Nio at 30 days with a basis of $39.
The stock was trading at $37 and heading down when I did this. My objective was to collect a little premium on a long position but be perfectly willing to get assigned at $45 and make my $6.00 profit plus premium.
Been holding this for so long without much profit that I am willing to dump it.
Doesn't this make sense?
so what happened to it?? did it keep dropping or did it climb??
Today for the first time I made the mistake that you mentioned. I was in hurry and instead of selling call I bought a call 😂😂
Almost did that myself
We've all been there
I had a question, so for covered calls, it goes off of your stock average price not the actual current price of the stock. For example if my average cost price of the stock is $50 but the current price is $55, the covered call will go off of my average price correct?
Great content Brad. I haven't written any covered calls yet, but your videos are really instructive and are giving me the confidence to start soon.
Is it a good strategic move to make if I sell a covered call with a premium of 1.22 and after 5 days, the premium drop to 0.2, then I buy the call to close the position and consequently sell another covered call at a lower strike price to just receive another premium instantly?
Yes. I've done this many times with a falling stock. Keep making money while it falls.
Yup! Exactly.
I agree
I'm learning options. How do I set an automatic for 'buy to close' call at a 75% profit on eTrade ?
Thanks for sharing the video.
Limit buy order for a price that is 25% of the premium you collected. If it fills you are left with 75%
Great video. I’ve learned a lot about covered calls from watching your videos. Do you ever use technical analysis when selling calls and puts?
Generally I dont check out TA for anything over a day or to
i remember some one trying to tell me i didn't know what i was talking about when i told them i want to be exercised. my man explained it perfectly at 4:19
cheers
Very helpful. Thank you. I'm viewing it for a third time.
Cheers Eve! Thanks for the comment
Good stuff, only thing is people need to consider the const of getting in/out of these trades.
Buying to close adds to your cost for the trade so might not be worth it
👍🏻
the #1 prob you mentioned about buying instead of selling a call is something I noticed happens much more on a phone than a computer/laptop. Must be the smaller screen and touch screen scrolling vs a mouse that you can 100% aim for what you want. I have noticed similar probs along these lines like a different strike price than what I wanted or sometimes a different expiration period. Be careful using a phone to trade, your finger can accidentally scroll something you don't want.
thanks for the tip
Just don't use your phone for financial transactions, ever.
Nice video thanks. Quick question.. You mention that that you like to close at 75% profit level and one on the main reasons is that you may not be able to close due to lack of liquidity as you come closer to expiry.. My question is.. why not let it expire worthless that way you do not have to worry about liquidity or paying brokerage commission..
You can definitely do that. After being burned a few times on contracts "I knew would expire worthless" go south on Friday just isn't worth it to me anymore. And I dont pay brokerage commission so that is a non issue
@@BradFinn Thanks Brad for a prompt response.
I still don’t get the whole tax burden thing on your long term capital gains. You’re gonna sell the stock eventually so you’re gonna have to pay those taxes at some point. The only difference in my eyes is if your tax bracket changes but if your income is increasing over time then you’re gonna end up in a higher bracket.
I got assigned twice on pmcc before I figured out RH closes them for you at 3:00 on Friday expiration. This video has improved my strategy!
yes they do. This is stated in their terms and conditions
@@BradFinn oh. Terms. Yeah.....should’ve read that
I always buy another 100 shares when stock reaches strike of my sold calls. This way I collect premium without losing any shares
Nice
You are so correct about being mindful about the percentage of the premium relative to the collateral on a CSP or relative to your cost basis on a CC! I feel that most people overlook this.
I have been making bank on JNJ CC's for months. Somedays I Sell to Open and Buy to close in the same day. The swings have been so predictable until recent earnings, but the trend seems to be continuing, just at a lower strike price.
Really good video! I would add that people need to take into consideration the trading cost. If each covered call cost you $11, it eats up at your profit (Same if you close early).
Every brokerage is different. Mine is zero and at $11 you’re getting ROBBED!
@@BradFinn oh man! Not much choices here in the Canadian frozen land lol
I can see why the Wheel strategy wouldn’t be worth it on SPY. What about a LEAPS on SPY and doing a PMCC? You would only need to put up about 1/4 the cost compared to buy the 100 shares. So selling covered calls will have a better ROI.
What about the fees? What about trading in Ira?
Depends on your broker. I pay $0.00 USD for mine
do you think SPY is the best stock to start with?
No
I feel like just by selling covered calls with an expiration of 30-45 days and by rolling the position after 3 weeks, we can avoid the risk of assignment and stack numbers over time
I really appreciate this series you’ve done.
cheers
I sold covered calls with high premium, the stock went up a crazy amount.... I don't want them to get assigned. Can I keep rolling my call? My stock went up over 90% in a night.
Guilty as charged as far as buying a call instead of selling one and then you have the day trade restriction on top of it and have to wait another day! I know this is a CC video but I’d love to hear more of your thoughts on rolling POCC when you have to do it at a loss. Do you also go for a higher delta on the short leg next time or stand your ground? I’m just getting started with PMCC but I’d love to hear more of your thoughts on rolling them when you have to at a loss.
Eek ... On your discussion about covering @ 75%, I need to remind you that stocks are modeled according to exponential Brownian motion w/ drift, and when doing weekly options, the Brownian motion is a factor even though it's expected value is 0. When covering a call @ 75% profit, you will tend to hold it longer for the same fixed profit % than someone holding it to say 95% profit due to the decay curve steepening at the end. This means the variance of the Brownian motion over the time period you hold the call will be unnecessarily large due to your choice to cover early (recall the variance of B(t-s) is t-s). For this reason, if the stock's options have enough liquidity, I'd recommend not closing it this early.
great analysis for the rocket scientist. In laymans terms the theta decay increases the closer it gets to expiration. You might have to hold the option for three weeks to get the 75% but only two more days to get another 20%. I tend to hold the option until close to expiration. Anything that has a realistic chance to get assigned I roll into next week. If not then I let it expire worthless and get 100%.
@@michaelmccusker7265 Well, I've since backtested my assertion on multiple stocks using the Black-Scholes model for historical option price (so one limitation is this is theoretical, not actual) and ... it actually showed a small local maximum in return when buying back at 75-80% return. I was shocked by this. I tested this not only for multiple stocks, but for multiple values for %OTM strike. I have the graph if anyone's interested in the results.
@@deadduck8307 Great discussion! So in layman's terms you're saying that he is correct by selling at 75% profit?
@@PadreDProductions Yes and no. You can look at my results graph here:
Protocol: HTTPS
Host: Dropbox
File Path: /s/n7xz7cqmqsm7wpk/
File Name: Screenshot%202021-11-12%2002.33.38.png?dl=0
My apologies for warping the URL by breaking up the pieces, but RUclips wouldn't let the comment go through otherwise. Hopefully, if anyone's interested, they can put it back together.
It's important to understand the limitations of my backtest.
1) Historical options pricing was approximated by the Black Scholes Model, where the risk-free interest rate was assumed to be constant.
2) This backtest was only done on one stock (AMD) and the results may be different on other underlying assets.
3) I only trigger a buy-back using closing options prices, not intraday as it would be with an open limit order in a forward test.
With these limitations in mind, the results seem to confirm the author's claim, yes.
The worst is selling a covered call and being tied to the call and the stock rallies past the strike and you can’t sell your shares because you’re tied to the covered call then the stock price tanks below your cost basis. But at least you’ll collect premium after that roller coaster lol.
what u mean tied to the call??
@@Eastbaypisces when you sell a covered call you are agreeing to have your shares called away at that strike price (your short call) by expiration. If the stock rallies past your strike price your short call becomes very valuable. Your profits are capped on your 100 shares to that short call strike and your call that you sold short is realized, meaning you already got paid for selling the (covered) call. So unless you have level 4 options you can’t sell your shares without buying back that short call bc that would create a naked call. You could always sell a covered call and buy a lower delta super cheap call in case that does happen IMO. Doing that takes away from your realized short call premium but it catches any huge upside moves.
@@Eastbaypisces a covered call essentially handcuffs your 100 shares to the sold call strike price until you either 1) buy back the sold call or 2) let it expire worthless for maximum realized profits bc the stock never went past that strike price.
@@dansage3665 so if i got 100 shares(already own) of SKYT, i paid 6.99, its trading at 14.99 and i sell the call for say 20.00premium and put a strike at 19 w exp next week and next week the stock only goes up to 16/share i keep the premium once i buy back the call (i get the difference from that the share price and strike price) right? so u mean tied to it if the option gets assigned? if i got assigned then i would b selling the stock at the strike price right??
@@Eastbaypisces sorry im not gonna give a class on covered calls on a RUclips comment thread ;) if you have 100 shares you can sell calls above your stock average as long as you’re ok selling the stock if it goes above your strike
I got this shit down now thanks to you and Adam!!!!🚀 Another great video!
Humbling to be put in the same sentence as Adam. Dude knows his shit!
great content! subbed! so basically, buy something like $T or even $F at a discount, if possible, and just sell that otm call over and over...
Sounds good to me
I think selling monthly provides better opportunity. For instance, say I sell weekly and I’m assigned each week, 4 times in one month, between calls and puts, I’ll be losing 4 weekends or 8 days of the month without capturing premium because if I’m assigned on Fridays, I wouldn’t be able to open new contracts until Monday therefore giving up time decay from the sat and Sundays before. I’d rather sell a monthly for a buffer like you said, and plan to close in a week or two if price goes against me. If I can’t close cuz I’m ITM then I’ll let it expire and get taken away in four weeks for 4 times the premium that a weekly would give me.
Cool. Thanks for sharing
thats why we write the calls on a friday and not monday
Love when u do these types of videos! Great info, great guy! 🤙
Thank you so much David. Sometimes the best videos are the ones that just happen. Wasn't planing on this one at all.
Do you have a video breaking down exit strategy? I am about to start Pmcc with Tesla, but I’m nervous on how to get out.
To clarify, PMCC exit strategy - if I get assigned and don’t have buying power to buy the 100 shares at my strike price, do I get the money from the assignment before I exercise? Does the brokerage do it automatically? Do I go to jail 😭😬
ruclips.net/video/8vwMayXWRxQ/видео.html
I’m not going to lie. This is the exact philosophy I use. I’ve been trading since 2016 and so far, this is what I’ve learnt. In a stable market, 2% monthly works for me, in volatile and bearish market like now, 1.5% a month is fine with me.
That doesn’t suck at all. Thanks for sharing
@@BradFinn that being said though. I did think Delta meant the percentage change in option value for every one dollar change in stock price, not percentage of whether stock price will hit strike price or not.
So for instance, a strike price with a delta of .3 (30%) means for every one dollar change in stock price up or down, the option value will move 30c up or down. This is the second place I’ve seen delta defined like this. But the old school guys I learnt from defined it as I defined it earlier. Am I missing something?
Thank you for sharing your experience
No worries!
My guy, I love your communication style in your videos. You're great for newbies like me trying to understand the wheel strategy and the basic mechanics of puts and options.
My question: I've got a lot of shares in JEPI. (+2400) and my cost basis is 56.00. It's trading these days at 54.10 give or take. Do I need to get my cost basis down before trying puts with JEPI? Again I own all these shares and don't know how to get started with my 1st option or put. Please help! 🙏
Thank you!
Thanks for the kind words. I can speak intelligently on what’s best for you. Gotta choose the best strike that’s best for you
How do you like the Jefferson oceans ?
Love it
Thanks so much Brad for the great video. May I check if I want to close the sell puts option before expiration date with minimum loss, how can I do it? Thanks
Yea so I just did this last week lol. What should I do when buying?
Huh
I sold covered calls by accident (wanted to buy calls while actually holding stock), I thought I could only buy options and do covered puts on TD. Anyways, I sold them right away and missed out on a few grand! Oh well, now I sell CC's all the time
Great content! If you bought a stock at $40 but it is now trading at $30. At what strike and expiry would you sell a cover call? Would you roll it if it gets ITM say you sold a $32 strike.?
I only write calls with a strike above my cost basis for the 100 shares. simple as that :)
Yeah, about flat. I put together an iron condor on Berkshire because it was flat for days and a few days later, it decided to go up 6%- Doh!!!! Lesson learned, if a normally "flat" stock has been flat for some time, don't expect it to stay that way for a lot longer.
you got it
I'm having trouble understanding options because paper trading is delayed and not working like it does in real world. What would you recommend I do to just test the waters? What kind of stock can I play with on one option to see how this works?
You have explained it the best!!!!
Thank you
Your videos are the best on RUclips explaining options. Question I have my cost basis set to spec ID on Vanguard if I get assigned will it give me the choice of which block of stocks to sell? I have ABBV at all different cost basis from 60 to 111.00. Or should I go in and choose First in first out or Highest in first out. I sold my first covered call after watching your videos over and over 2 × 142 strike price expires 2/4 using the criteria explained. Thank you
I appreciate the kind words Peter
I answer questions on my live stream every Sunday night in the chat as well as voicemail www.speakpipe.com/BradFinnLive
You can also find me in the discord. Cheers
I like how last week I bought a call I was trying to sell and thought I was the only one 😂😂
No you are not
Kid was bothering me one day when I was trying to sell an OTM call (I typically sell a ton of puts). A couple days later as the option price was increasing as share price dropped and I was like huh, I then realized I sold an ITM put. Was really painful/expensive mistake. But I think when you realize you made a mistake, BTC it immediately vs trying to "fix it". At least that is always what I do... You trade enough, trust me it happens!
Thank you sir very informative
Sell to open with a covered call. Great money making strategy because you get to sell the stock and receive the premium which in the somewhat improbable event that the stock is above the strike price just a little you might get assigned to sell but it's like you gain on selling for profit and premium. So say you sell for $44 strike and premium is $5.00 you basically get to sell the stock for $4900 or more like $49 a share. Great profits.
So buy to close means I can still keep my shares and get less of the premium ?
not really. it means you are paying to close your option. Nothing happens to the premium you collected
@@BradFinn thank you
Can you explain what happens when you get assigned. Let’s say I sell a $75 call for $2.00 premium and the stock goes to $90 what happens and what is my loss?? I know the contract is going to be worth $15 at expiry but does that mean I lose $15 if I just get assigned.
Thanks for a great video, Brad! You really work hard on these videos and it shows. Thanks again and take care!
I appreciate that!
Hello, i am doing covered call and i know why some delta is positive and some is negative?
Here’s a video on the Greeks ruclips.net/video/4dO3FcOsNwY/видео.html
I really appreciate the video it was great.
Any reason you can't just let the cover call expire? You still get your premium right? Is there any benefit to buy to close it its not close to hitting strike price. I'm new to covered calls and only done a few times
You can let them expire if you want. Here’s why I don’t
ruclips.net/video/vMWuYPMRYiY/видео.html
@@BradFinn thank you
Great video. Thanks for sharing.
I don't understand. Wont we eventually have to pay taxes whether holding long or short? Are the taxes higher on day trading compared to holding a stock 5 years then selling?
They are short term capital gains
Good stuff. Great education for those not familiar Covered/Poor Man's calls.
Thank you so much
This is an awesome video. Even I want to buy you a drink for this. Thank you so much.
Cheers
Great video! You have the knack for teaching. Something I'm not clear on, say I purchase 100 shares of..whatever. if I sell a call that ends up ITM, I get assigned and I have to sell my 100 shares at the strike price. Is that money automatically transferred into my account by my brokerage? Thanks.
Appreciate the video, thank you.
crazy thought for me I don't mind getting assigned Why? I pick a strike price that gives me the 5-10% appreciation I want to earn on the stock. If the stock moves within a defined range, I'll buy back in close to my original cost basis.
Not sure what you mean, sorry
Made a bad mistake this week.. sold covered call on tesla and it rallied like crazy and now my far OTM is close to ITM and sweating bullets I'm about to get assigned. Still got a few weeks.. but may need to buy back to close this out now at a big loss.
Good luck
@@BradFinn thank you. Thinking of rolling it out, if the rally continues so maybe make back on higher premium later.
Wanted to take a minute to say that you are great. I really appreciate the way you do things. Thank you for contributing. And I spit out my own drink when I saw how little you had left in your glass at the end of the video!
Haha. Cheers bud. Thank you for the kind words
Brad..I own 6 long GME 12 Jan22..What's the best that can be done other than encashing the Option..Appreciate your candid response.
I'm sorry, I am not a financial advisor. Good luck
He not an Ape. He's a shill duh
So what your saying, for figuring out a percentage per return, is to calculate premium recieved divided by capital towards collateral?? So if I put up 5000 for collateral and receive $50 in premium, that would calculate to be 50/5000 = .01 or 1% return on investment? I should reach towards how much? 10%? 20%? Per month? Per year? I don’t see how that’s possible per month. Ty
This video is very informative 👍
Thank you so much
That's why you do a roll-out to get out of the short term tax gains. I do covered calls with TSLA all the time.
nice
I'm thinking about it too. How do you determine when exactly you need to roll your TSLA calls? Just BTC on Thursdays to play safe?
I've found I am about 50% assigned versus expiration on 30 day covered calls. The concern I have is when there is still time until expiration maybe 2 weeks and the underlying (CRM in this case) is significantly over my strike price do I roll, close or wait for assignment? The answer might be it depends? I already secured a nice profit more than 100% annually if extrapolated over 12 months.
👍🏻
Hey Brad, I own couple of thousand shares of Blackberry at $14 a share, stock is trending around $12 right now and I am not married to it in fact I want to hedge out of the stock. Do you recommend selling covered calls for strike price of $14? I can live with just the premium if I get assigned. Just to see if I understand this correctly, in order to keep the premium I want the price of stock to stay below or around $12 but not over $14 right?
When using an IRA account do the unrealized capital gains not matter since I won’t be taxed until I pull out money?
correct
A study done by tastytrade shows that cutting losses is WAY more important than cutting profits. Generally I’ll cut losses at 50% and I have yet to regret that when looking back after the trade would have finished.