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Yeah, it's really just a matter of knowing what to do under each different market condition. Pullbacks are to be expected from time to time, so you just have to know how to make the most of them.
Hi Charlie, Great videos. Thanks for putting them out. I do have couple of questions: 1- I could not find the website you showed on the video. Could you share the link? 2- How do you calculate the margin you will need for this trade? 3- How do you keep track of all the possible margin needed for all the trades? 4- If you get to buy the shares, do you sell the Long Call for extra premium? 5- How/when do you tell your broker to use your shares to cover for the short call instead of using the long call? Thanks again, Take care.
I'm glad you like them! 1. My patreon page is at patreon.com/moremoneylessproblems. 2. The margin required will just be the cost to buy the shares, so that's just the share price * 100 3. In your brokerage account, you should be able to see how much buying power you have, and once you set up your automatic buy order in this trade, it'll take away from your buying power. So if you're using margin, your buying power basically tells you how much available margin you have left to use. 4. Yeah exactly! I'll sell the long call at that point, and sometimes you can even sell it for a profit, depending on how much and how quickly the stock rose. 5. It should just do it automatically so if you already own 100 shares, it'll just sell those shares at the strike price of your short call.
Where was this video 2 weeks ago for me?! I followed the otherwise solid advice of LEAPS over a year out, but now I have 4 stocks that are under significantly. If I just did what you said, I would have been rolling in the money at this point. Also, I use Ameritrade, but I dont see when or where I can setup the Auto-Buy below that strike price if needed, as video suggests.
For this strategy you might not be owning the stock but you have to keep the spare funds in case stock rises. And this spare fund doesn't give any return
you kind of have to have a lot in reserve to do the auto buy, seems like if you have to reserve it like that, just buy now and continue with the CC. I get it though, people want to sell a bunch of premiums and not have to have all the money tied up in a reserve buy status.
@ Michael Wescott "just buy now and continue with the CC." If you buy the stock now, you are at risk of a down turn of the stock price, if you are wrong about your belief that the stock is trending up. No downside risk when you are in cash, waiting for the buy order to trip, on the way up. If the stock drops, and you didn't buy the stock, your short call expires OTM and you keep the premium. If you buy the stock early and it drops in price, it can fall lower than your break even from the short call premium and you are at a paper loss until the stock recovers. It's not just about selling a bunch of premiums, it's also downside protection.
Hi I have a question! Why not just trade predefined vertical spread. That way I don't have to set two individual trades. And from my understanding both will be executed by the brokerage at expiration, and that should element the risk of being assigned. Thanks in advance.
Unless price closes between the strikes, then only the short leg is assigned and if you don't have 100 shares then you will be short 100 shares after assignment.
Not sure if I missed it, but where is the long call purchased in this strategy? Is it a deep ITM LEAP to simulate a PMCC? Or, is the whole position OTM and the long call is much closer to the short call?
When you're selling a naked call, there would be no long call but when you're using the bear call spread, the long call will be OTM and at a higher strike price than the short call.
Incorrect to say that you will make money if you buy back the spread when prices reaches short call option. The market would have moved against you by that time, so you'll end up paying up more to just buy it back. It really not that easy to make money on spreads with a volatile market. Needs constant monitoring and rolling up/out etc. I'd say don't leave out these details and too pretty of a picture because people are going to get burnt with their hard earned money.
That’s not what I’m saying, I’m NOT suggesting that you should buy back the spread. I’m talking about buying the actual shares, so that you can deliver them at the strike price of your short call. Check out my full bear call spread tutorial if that doesn’t make sense because again, I just gave a quick overview of it in this video.
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📈 GET UP TO 6 FREE STOCKS BY SIGNING UP FOR WEBULL USING MY REFERRAL LINK
a.webull.com/i/MoreMoneyLessProblems
(Stocks valued between $35 and $12,600. Promotion ends June 9, 2022)
another great video. i like how calm you seem, even when the market is being a pain in the ass.
Yeah, it's really just a matter of knowing what to do under each different market condition. Pullbacks are to be expected from time to time, so you just have to know how to make the most of them.
Hi Charlie, Great videos. Thanks for putting them out.
I do have couple of questions:
1- I could not find the website you showed on the video. Could you share the link?
2- How do you calculate the margin you will need for this trade?
3- How do you keep track of all the possible margin needed for all the trades?
4- If you get to buy the shares, do you sell the Long Call for extra premium?
5- How/when do you tell your broker to use your shares to cover for the short call instead of using the long call?
Thanks again,
Take care.
I'm glad you like them!
1. My patreon page is at patreon.com/moremoneylessproblems.
2. The margin required will just be the cost to buy the shares, so that's just the share price * 100
3. In your brokerage account, you should be able to see how much buying power you have, and once you set up your automatic buy order in this trade, it'll take away from your buying power. So if you're using margin, your buying power basically tells you how much available margin you have left to use.
4. Yeah exactly! I'll sell the long call at that point, and sometimes you can even sell it for a profit, depending on how much and how quickly the stock rose.
5. It should just do it automatically so if you already own 100 shares, it'll just sell those shares at the strike price of your short call.
You ROCK! Thanks for your time and videos!
Where was this video 2 weeks ago for me?! I followed the otherwise solid advice of LEAPS over a year out, but now I have 4 stocks that are under significantly. If I just did what you said, I would have been rolling in the money at this point. Also, I use Ameritrade, but I dont see when or where I can setup the Auto-Buy below that strike price if needed, as video suggests.
For this strategy you might not be owning the stock but you have to keep the spare funds in case stock rises. And this spare fund doesn't give any return
you kind of have to have a lot in reserve to do the auto buy, seems like if you have to reserve it like that, just buy now and continue with the CC. I get it though, people want to sell a bunch of premiums and not have to have all the money tied up in a reserve buy status.
@
Michael Wescott "just buy now and continue with the CC." If you buy the stock now, you are at risk of a down turn of the stock price, if you are wrong about your belief that the stock is trending up. No downside risk when you are in cash, waiting for the buy order to trip, on the way up.
If the stock drops, and you didn't buy the stock, your short call expires OTM and you keep the premium. If you buy the stock early and it drops in price, it can fall lower than your break even from the short call premium and you are at a paper loss until the stock recovers.
It's not just about selling a bunch of premiums, it's also downside protection.
What happens if you set the automatic buy order $1 below the strike price but the stock pops in after hours and you miss the buy in?
He explains at 3:20
Hi I have a question! Why not just trade predefined vertical spread. That way I don't have to set two individual trades. And from my understanding both will be executed by the brokerage at expiration, and that should element the risk of being assigned.
Thanks in advance.
Unless price closes between the strikes, then only the short leg is assigned and if you don't have 100 shares then you will be short 100 shares after assignment.
Not sure if I missed it, but where is the long call purchased in this strategy? Is it a deep ITM LEAP to simulate a PMCC? Or, is the whole position OTM and the long call is much closer to the short call?
When you're selling a naked call, there would be no long call but when you're using the bear call spread, the long call will be OTM and at a higher strike price than the short call.
@@MoreMoneyLessProblems Got it. Makes complete sense. Thanks for clarifying. I'm definitely a fan of working these strategies in my own trading.
seeeeeeemss likee aa wastee of buying poweeer. sshould just roll ur spreadds uup or down
Incorrect to say that you will make money if you buy back the spread when prices reaches short call option. The market would have moved against you by that time, so you'll end up paying up more to just buy it back. It really not that easy to make money on spreads with a volatile market. Needs constant monitoring and rolling up/out etc. I'd say don't leave out these details and too pretty of a picture because people are going to get burnt with their hard earned money.
That’s not what I’m saying, I’m NOT suggesting that you should buy back the spread. I’m talking about buying the actual shares, so that you can deliver them at the strike price of your short call. Check out my full bear call spread tutorial if that doesn’t make sense because again, I just gave a quick overview of it in this video.