►► AVAILABLE NOW! Limited to the FIRST 100 people, get my brand new online Option Trading course (Intermediate option trading) for $497. Regular price is $997. Here is the link to check it out: mylifeoflearning-randy.mykajabi.com/offers/EgeavtWJ Subscribe to this Channel: th-cam.com/channels/eUPN22CHOgoDTZ4QfOjxHw.html Join my PATREON and get access to my WEEKLY TOP 5 STOCKS, DAILY TRADES & more Awesome Extras: www.patreon.com/mylifeoflearning New Beginnings: The Option Trading Story amzn.to/2OgXx58 Instagram: instagram.com/mylifeoflearning_/ Website: mylifeoflearning.com/index.html Facebook: facebook.com/jamiston.queens.5
The general rule of thumb of when to roll your covered call options is when the options become in the money. You should do it as soon as possible regardless of ex-dividend dates. And when you roll your option, you should always seek to collect a credit. Do this perpetually and you will always have new cash coming into your account and you will never have to part from your shares.
If an option is DITM, unless you go pretty far out in time, it can be challenging to collect a credit. But generally, you are at least be able to roll out for a break even. There are some exceptions when the bid ask spreads are really wide, but generally in a situation like that, if you go far enough out, you'll be able to get a credit if you're roll the same strike price.
I tend to go this route. For several reasons: 1. The stock could reverse and if you didn't roll, you missed the opportunity for a wider profit zone and more credit. 2. You are capping your gains prematurely, if you don't roll. 3. The deeper the stock goes in the money, the larger the spreads and the less likely you will be able to capture additional premium.
You are wonderful. That hint about the Put price indicating the Call extrinsic values is so obvious, but NEVER occurred to me in last 10 learning years !! Thanks.
I use spreadsheets to keep track of everything. I’ve developed them over my years of trading. Here’s their link if you’d like to check them out: etsy.me/3HHq5ge
Good eye Michelle! That's the name of the exchange that the options are trading on. So that alert is basically pinging each option on that exchange and as soon as the midpoint of each option reaches it's set alert price, I get an alert.
@@StockandOptionMyLifeOfLearning How do you usually decide the mid point value of each option? Does mid point value represent the extrinsic value left to the options you sold?
If I'm understanding your question correctly, I define the midpoint value as the middle of the ask and bid. And it would only be the extrinsic value of the option if the option was out of the money.
Thanks for your question and support! Yes you don’t have to let it be called away from you, you could also do as you described and roll the option out in time and up in strike price.
Yes, unless you’re classified differently, if you are concerned with taxes, you’d want to consider the wash sale rule. Here’s a video on that exact subject: th-cam.com/video/xdcQCKZtJhI/w-d-xo.html
Thanks for your question and support! PLTR is not a stock I am familiar with at all. So all I can do is look at the charts and since it just started trading on September 30th of last year, there's really not enough data to make what I consider a solid technical read. Please don't base your decision on this but PLTR does seem to be trying to form a temporary support point around $20 and resistance around $28. It's just impossible to say that for sure because it's such a newly traded company, that there's not enough data points to make a solid technical read. In your case here, I'd rather base your decision on where you'd feel comfortable with the stock being called away. In this situation, that'd be my main focus in deciding where to roll the covered call strike out to. Here's a couple videos I made on that subject if you'd like to check it out: th-cam.com/video/cwoqR5fNHkA/w-d-xo.html and th-cam.com/video/7s4iakIyDNQ/w-d-xo.html
Great video THX much... I have a question: While rolling a covered call... In order to make a profit(net credit)... 1)Is it best to do it on day of expiry or before? 2)Is it best to roll when stock if running up or down? I have meta calls deep ITM expiring Friday... Sold To Open 1 contract META Jun 09 2023 240 Call at limit @ $6.65 I don't wanna sell this at 240$ price!
It really is situation specific because if it looks like a stock is topping out, then you’re probably better off waiting as it comes down. However, if it looks like it’s about to takeoff, then you want to go ahead and roll it before it does that. And we are also hoping to do that when there’s not much time value or extrinsic value left in the option.
@@StockandOptionMyLifeOfLearning Thx... I do have a question... I bought Amazon 100 shares at 111. Sold calls at that strike. It hasn't been sold yet why... Why wouldn't anyone buy at 111 now? It's at 125 now! I'm glad it hasn't called off but curious as I'm new to this relatively ... I wanna hold on to Amazon since I think it'll go past ATH eventually. Pls explain if you can thx... Here's details: Sold To Open(1 month ago) 1 contract AMZN Jun 09 2023 111 Call at limit @ $1.83
Randy you videos are great, I notice in most case you sell covered call right away when stock is assigned, may you share some kind of guidance of how you choose the strike price for the covered call, and would you has any target premium to pocket (eg 5% of stock price)or whatever premium it offers with the strike price you choose.
Thank you for your support Ray! I prefer to sell CCs right away unless it looks like the stock is advancing with no signs of slowing momentum. I don't have a target premium except to collect as much as possible but still try to line us up to win the long game. So if a stock is advancing I'd ideally like to sell the CC at the spot where I think it'd find resistance. However if a CSP has just been assigned to us, that probably means that the stock is trading for a decent bit below where we bought it at. In that case I'd probably sell the CC at the strike we bought the stock at. If however this stock has declined substantially, then I would be willing to sell the CC at a strike below where we bought the stock at but hopefully at an area that should serve as resistance for it. Here is a video I made on the subject: th-cam.com/video/aK-nPXZ1hAA/w-d-xo.html
I have some questions about a few current positions I have but don't need to post them here. If I join patreon can I ask them directly to you or do you have a way to message directly? Very informative and practical information here without all the hype. Much appreciated.
I have a question. If I sell covered call 12 dollar for $1.30 and at experation stock price is 12.50 will the stock will be called and I will keep difference beetween 12.50 and 13.30 price? Will option just expire? What will happen?
If you do a covered call and sell the $12 call option strike price and the stock is higher than $12 at expiration. If you don’t do anything with the position and allow it to happen, the stock will be called away from you and you will sell it at $12. You will get to keep the option premium for the call option you sold but you will sell it at $12 per share no matter what price the stock is trading for that’s above your $12 strike price. Here’s a video Series on covered call options you might find helpful: th-cam.com/play/PL3j38I2YtGw0GuZi4OOSzGcx3Oq_SMr2K.html
If you were hoping to hold onto the stock then I would put a roll out there to roll that strike price up $5 to $155 and try and walk away with a small credit on top of that. It looks like JNJ is in a pretty good up trend and there's a lot of buying pressure in the daily and weekly volumes. Right now, as long as nothing changes, JNJ looks like it's heading up even though it is about to test his previous high. But the charts look bullish to me!
Abbv example you showed in this video was deep ITM by $30. Were you expose to the risk of the shares being called away before the expiration since buyer has the right to exercise? If yes, how do you determine when should you roll the option if you wanted to keep those shares? And if you roll, would you pick the same or higher strike price? Thanks.
Great questions Michelle! You do have exposure to the stock being called away from you however if you have time value left in the option then it's highly unlikely they will call the stock away from you unless they're trying to do a dividend capture. For example ABBV pays a pretty good dividend. It's actually going ex dividend this month and the dividend is $1.30 per share. So a few days before ex dividend date, if that call option has less than $1.30 per share in it, then it's highly likely that they are going to call that stock away from me. However let's say an option does not pay a dividend or is not about to go ex dividend, if there's still some time value or extrinsic value left in the option, that trader is better off just selling the option out on the open market rather then exercising the option on us because they're basically giving us that extrinsic value or time value if they exercise the option. That's why I set all those alerts on covered call options. So that when there's not much option premium left in that position, I'm reminded that it's time to make a decision to either let the stock be called away from me or go ahead and roll the position. When I roll positions my biggest factor is getting sufficient return. If the stock has not really increased in price then I'll probably just roll the position out. If the stock has gone down in price, that I might even roll my short covered call strike price down. And if the stock price is increased (and I can do it for a credit) and it looks like the stock will stay up, then I will try to roll the short covered call strike price up. Does that answer your questions?
If sell call option is ITM, what are the risk if I roll it to a farther date with the same strike price? E.g. Strike $50 expire Dec 13, share spot price is $55. If i roll the sell call option to Jan 15 with same strike $50, will i expose to the risk of my 100 shares being called away before the Jan 15 since buyer has right to exercise before expiration? Similar case to sell put ITM. E.g. Strike $220 expire Dec 13, share spot price is $190. If i roll the option to Jan 15 with same strike $220, will i expose to the risk of being assigned 100 shares before expiration?
Pretty much 100% of the time, the only time that your stock will be called away from you is if there is no or very little extrinsic or time value left in the option. The exception would be if the stock is about to go ex Dividend. At that point if the options extrinsic value is around or less than the dividend amount, then someone may exercise the option to capture the dividend. That's why I set alerts on the put and the corresponding call so I know as soon as my extrinsic value is getting down to either nothing or approaching the dividend amount. So just keep an eye on how much extrinsic value is left in the option and if it's a dividend paying stocks then you also want to factor in the dividend amount and what day it's going ex dividend. I hope that helps. Does that answer your questions?
@@StockandOptionMyLifeOfLearning Many thanks for the explanation. Is extrinsic value means the prem that i need to pay in case i want to buy and close the position? Also, if there's the case is it safer that i pick a higher strike price to roll my sell call, and a lower strike price to roll my sell put option to a farther date?
If an option is out of the money then it's price is made up of 100% extrinsic value. If the option is in the money, say for example an option is $1 in the money but it's selling for $5 in that case $4 of that $5 is considered extrinsic value and $1 is considered intrinsic value. You'd have to pay the $5 for it but its value is made up of those two components.
Hey Seng thanks for the question. The answer to your question is possibly. The reason why is because every time you roll an option, if you roll them the way I do (for a credit) then you are lowering your cost basis in the position. There are times when I end up selling a stock for less than I paid for it, but I end up with a profit in the overall position because I collected so much option premium. Does that answer your question? Thank you for your support!
@seng her if you are in a losing position you would roll futher into the future (make sure its enough to cover ur current losing position) until the stock goes ur way then get out
Yes that's correct. If I felt negatively about the current strike price I would also try to roll the short put strike price down. If my whole outlook of the company changed from positive to negative, then I would consider exiting the position and taking a lose. That happens very infrequently. When it has happened I'm usually able to pay for closing the position out by selling ITM puts in a new company that I feel very strongly about. I did that one time earlier this year and it worked out great!.
Hey Kamran we keep cash in a couple of different accounts. We don't keep it all in one account. We are comfortable selling short put positions (or owning covered call positions) for the entire amount of cash we have set aside for option trading. However we do not use leverage. So if we have sold 100k worth of positions then we have 100k set aside in case they get put into our account.
I sold 3 covered calls for nio for 3 months out for $50 strike price. Currently at $43. I received $1100. If it hits say $55 or $60 and my shares get called away, besides the premium, do I keep the profit from $43 to $55 or whatever price it’s at or only up to the $50 strike covered call price? Thank you
Thank you for the question and your support! Since you'd be selling NIO at $50 per share, the strike price of the call option you sold, then you get to benefit from any price appreciation up to that sell price. Since you would be selling it at $50 you would not benefit from any price appreciation beyond that. However you would get to keep the option premium of $1100 that you received.
My Life of Learning thank you. So the covered calls is for December, if it hits $50 next month, can I force them to exercise it so that way I can go on the open market n buy more shares or I have to wait till expiration and have to wait it out?
You cannot force a buyer to exercise an option you have sold. If you wanted to reset the position, then you could always buy the option back and then sell a new one (if it benefited you) or just buy it back to close it out. Otherwise you just have to wait to see what happens.
My Life of Learning thank you. I bought it back on the dip n will do weekly covered calls rather than months out. When you do the math, the weekly will pay double as supposed to picking one months out
Hey Sarkis thank you for your questions and support! Yes I keep my records manually in excel spreadsheets to help keep track of my P&L in each stock. It also comes in handy when filing my tax returns. It's the same excel sheets I share snapshots of in my videos.
@@StockandOptionMyLifeOfLearning Thanks Randy, is there a way to share the template of excel sheet? as i have started following up some of your trades and would like to keep track of them. If not its all good, will make one by myself.
@@StockandOptionMyLifeOfLearning thanks Randy, for me it’s fine as I created one same as yours which was easy and quick. If that helps to your other members maybe it’s good to share. Happy trading and Merry Christmas
I like to buy at-the-money spy or qqq 2-yr leaps and sell weekly calls against those with a 90% or higher chance of being called. I basically collect cash (bread crumbs) while I wait for the (big bread) leaps to be deep in the money as they expire 2 yrs later. Then I sell, collect cash and buy leaps again while I keep collecting little cash weekly.
Hey Jonathan thank you for your sharing and for your support! I like the continuous inflow of cash and buying LEAPs. That sounds like a great strategy!
@@StockandOptionMyLifeOfLearning Best part, it leaves your margin untouched and accessible for other trades, as we all know we can't buy options on margin. Thank you for sharing your awesome videos and insights.
Hey thanks for sharing...when you say you sell short calls against it with 90% chance of being called away....does that mean selling short calls with .90 delta? Meaning the short call is extremely deep in the money?
That's a great point Jonathan! Just please keep in mind that if the market moves against your long LEAP positions, and it does it in a big way, and you're using 100% of the value of your account, your account could take a big hit if you were forced to liquidate. So you just want to be mentally and financially prepared for that.
►► AVAILABLE NOW! Limited to the FIRST 100 people, get my brand new online Option Trading course (Intermediate option trading) for $497. Regular price is $997. Here is the link to check it out: mylifeoflearning-randy.mykajabi.com/offers/EgeavtWJ
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The general rule of thumb of when to roll your covered call options is when the options become in the money. You should do it as soon as possible regardless of ex-dividend dates. And when you roll your option, you should always seek to collect a credit. Do this perpetually and you will always have new cash coming into your account and you will never have to part from your shares.
Thanks for sharing your strategy.
@@StockandOptionMyLifeOfLearning collecting a credit every time is a good strategy... but impossible
If an option is DITM, unless you go pretty far out in time, it can be challenging to collect a credit. But generally, you are at least be able to roll out for a break even. There are some exceptions when the bid ask spreads are really wide, but generally in a situation like that, if you go far enough out, you'll be able to get a credit if you're roll the same strike price.
I tend to go this route. For several reasons:
1. The stock could reverse and if you didn't roll, you missed the opportunity for a wider profit zone and more credit.
2. You are capping your gains prematurely, if you don't roll.
3. The deeper the stock goes in the money, the larger the spreads and the less likely you will be able to capture additional premium.
You are wonderful. That hint about the Put price indicating the Call extrinsic values is so obvious, but NEVER occurred to me in last 10 learning years !! Thanks.
I’m still not sure I got my head around that idea…
Hello! Thank you for your video! Do you recommend any particular data entry to keep track of gains and losses?
I use spreadsheets to keep track of everything. I’ve developed them over my years of trading.
Here’s their link if you’d like to check them out: etsy.me/3HHq5ge
Questions for setting alerts (refer 14.25 min mark)
What does SMART mean?
For Abbv alert : what does 0.15 mean and how did you determine it?
Good eye Michelle! That's the name of the exchange that the options are trading on. So that alert is basically pinging each option on that exchange and as soon as the midpoint of each option reaches it's set alert price, I get an alert.
@@StockandOptionMyLifeOfLearning
How do you usually decide the mid point value of each option?
Does mid point value represent the extrinsic value left to the options you sold?
If I'm understanding your question correctly, I define the midpoint value as the middle of the ask and bid. And it would only be the extrinsic value of the option if the option was out of the money.
Why you let the stock called away? Will this work?--buy to close the call option and sell to open it with a higher strike?
Thanks for your question and support! Yes you don’t have to let it be called away from you, you could also do as you described and roll the option out in time and up in strike price.
Nice breakdown man, not really into covered calls, but good to know 👊🏼
Thank you for your support CJ!
Great video: what are the tax implications i.e of rolling covered calls. Is there an wash sale rule impact here ?
Yes, unless you’re classified differently, if you are concerned with taxes, you’d want to consider the wash sale rule. Here’s a video on that exact subject: th-cam.com/video/xdcQCKZtJhI/w-d-xo.html
@@StockandOptionMyLifeOfLearning thanks for the video. Extremely helpful
Another really good video
Thank for that and for your support!
Covered Calls, spread trading, and selling cash secured puts,,!!!!!!
Thank you for sharing Jim and for your support! You and I like a lot of the same strategies.
I have 5 covered calls for $pltr the price has gone down. Should I roll them?
Thanks for your question and support! PLTR is not a stock I am familiar with at all. So all I can do is look at the charts and since it just started trading on September 30th of last year, there's really not enough data to make what I consider a solid technical read.
Please don't base your decision on this but PLTR does seem to be trying to form a temporary support point around $20 and resistance around $28. It's just impossible to say that for sure because it's such a newly traded company, that there's not enough data points to make a solid technical read.
In your case here, I'd rather base your decision on where you'd feel comfortable with the stock being called away. In this situation, that'd be my main focus in deciding where to roll the covered call strike out to. Here's a couple videos I made on that subject if you'd like to check it out: th-cam.com/video/cwoqR5fNHkA/w-d-xo.html and th-cam.com/video/7s4iakIyDNQ/w-d-xo.html
Great video THX much...
I have a question:
While rolling a covered call...
In order to make a profit(net credit)...
1)Is it best to do it on day of expiry or before?
2)Is it best to roll when stock if running up or down?
I have meta calls deep ITM expiring Friday...
Sold To Open 1 contract META Jun 09 2023 240 Call at limit @ $6.65
I don't wanna sell this at 240$ price!
It really is situation specific because if it looks like a stock is topping out, then you’re probably better off waiting as it comes down.
However, if it looks like it’s about to takeoff, then you want to go ahead and roll it before it does that. And we are also hoping to do that when there’s not much time value or extrinsic value left in the option.
@@StockandOptionMyLifeOfLearning
Thx...
I do have a question...
I bought Amazon 100 shares at 111. Sold calls at that strike. It hasn't been sold yet why... Why wouldn't anyone buy at 111 now? It's at 125 now! I'm glad it hasn't called off but curious as I'm new to this relatively ...
I wanna hold on to Amazon since I think it'll go past ATH eventually.
Pls explain if you can thx...
Here's details:
Sold To Open(1 month ago) 1 contract AMZN Jun 09 2023 111 Call at limit @ $1.83
Assignment is explained in this video: th-cam.com/video/RrWEqdmUYOI/w-d-xo.html
my favorite strategy is Shorting ATM Puts
Thank you for sharing! 👏 I like sign ATM puts also if there’s nice support there.
@@StockandOptionMyLifeOfLearning mostly shorting tsla & nvda puts... Free cash
Thank you
Another very informative video, Thank you!!!
Thank you so much for your support Lee!
Randy you videos are great, I notice in most case you sell covered call right away when stock is assigned, may you share some kind of guidance of how you choose the strike price for the covered call, and would you has any target premium to pocket (eg 5% of stock price)or whatever premium it offers with the strike price you choose.
Thank you for your support Ray! I prefer to sell CCs right away unless it looks like the stock is advancing with no signs of slowing momentum. I don't have a target premium except to collect as much as possible but still try to line us up to win the long game. So if a stock is advancing I'd ideally like to sell the CC at the spot where I think it'd find resistance. However if a CSP has just been assigned to us, that probably means that the stock is trading for a decent bit below where we bought it at. In that case I'd probably sell the CC at the strike we bought the stock at. If however this stock has declined substantially, then I would be willing to sell the CC at a strike below where we bought the stock at but hopefully at an area that should serve as resistance for it.
Here is a video I made on the subject: th-cam.com/video/aK-nPXZ1hAA/w-d-xo.html
@@StockandOptionMyLifeOfLearning thank you Randy for your valuable sharing!
I have some questions about a few current positions I have but don't need to post them here. If I join patreon can I ask them directly to you or do you have a way to message directly? Very informative and practical information here without all the hype. Much appreciated.
Hey Daniel thank you for your comment and support! Yes if you join Patreon you can message me directly directly. I look forward to working with you!
ICovered Calls is my go to strategy. I got burned this year doing credit spreads
Thank you for sharing
Tax implications of not closing positions by Dec 31?
That's definitely a good tax question! 🤔 I am not a professional tax advisor so I can't advise you on that with confidence.
Also, what about rolling to capture the 61 day qualified dividend tax rule?
If the return is sufficient, I’m definitely willing to roll a call option out in order to also benefit from receiving the dividend.
I have a question. If I sell covered call 12 dollar for $1.30 and at experation stock price is 12.50 will the stock will be called and I will keep difference beetween 12.50 and 13.30 price? Will option just expire? What will happen?
If you do a covered call and sell the $12 call option strike price and the stock is higher than $12 at expiration. If you don’t do anything with the position and allow it to happen, the stock will be called away from you and you will sell it at $12. You will get to keep the option premium for the call option you sold but you will sell it at $12 per share no matter what price the stock is trading for that’s above your $12 strike price.
Here’s a video Series on covered call options you might find helpful: th-cam.com/play/PL3j38I2YtGw0GuZi4OOSzGcx3Oq_SMr2K.html
What would you do with a covered call on JNJ 1/15/21 at $150?
If you were hoping to hold onto the stock then I would put a roll out there to roll that strike price up $5 to $155 and try and walk away with a small credit on top of that. It looks like JNJ is in a pretty good up trend and there's a lot of buying pressure in the daily and weekly volumes. Right now, as long as nothing changes, JNJ looks like it's heading up even though it is about to test his previous high. But the charts look bullish to me!
Abbv example you showed in this video was deep ITM by $30.
Were you expose to the risk of the shares being called away before the expiration since buyer has the right to exercise?
If yes, how do you determine when should you roll the option if you wanted to keep those shares?
And if you roll, would you pick the same or higher strike price?
Thanks.
Great questions Michelle! You do have exposure to the stock being called away from you however if you have time value left in the option then it's highly unlikely they will call the stock away from you unless they're trying to do a dividend capture.
For example ABBV pays a pretty good dividend. It's actually going ex dividend this month and the dividend is $1.30 per share. So a few days before ex dividend date, if that call option has less than $1.30 per share in it, then it's highly likely that they are going to call that stock away from me.
However let's say an option does not pay a dividend or is not about to go ex dividend, if there's still some time value or extrinsic value left in the option, that trader is better off just selling the option out on the open market rather then exercising the option on us because they're basically giving us that extrinsic value or time value if they exercise the option.
That's why I set all those alerts on covered call options. So that when there's not much option premium left in that position, I'm reminded that it's time to make a decision to either let the stock be called away from me or go ahead and roll the position. When I roll positions my biggest factor is getting sufficient return. If the stock has not really increased in price then I'll probably just roll the position out. If the stock has gone down in price, that I might even roll my short covered call strike price down. And if the stock price is increased (and I can do it for a credit) and it looks like the stock will stay up, then I will try to roll the short covered call strike price up.
Does that answer your questions?
@@StockandOptionMyLifeOfLearning
Got it, thanks so much for sharing yr experience!
If sell call option is ITM, what are the risk if I roll it to a farther date with the same strike price?
E.g. Strike $50 expire Dec 13, share spot price is $55. If i roll the sell call option to Jan 15 with same strike $50, will i expose to the risk of my 100 shares being called away before the Jan 15 since buyer has right to exercise before expiration?
Similar case to sell put ITM.
E.g. Strike $220 expire Dec 13, share spot price is $190. If i roll the option to Jan 15 with same strike $220, will i expose to the risk of being assigned 100 shares before expiration?
Pretty much 100% of the time, the only time that your stock will be called away from you is if there is no or very little extrinsic or time value left in the option. The exception would be if the stock is about to go ex Dividend. At that point if the options extrinsic value is around or less than the dividend amount, then someone may exercise the option to capture the dividend.
That's why I set alerts on the put and the corresponding call so I know as soon as my extrinsic value is getting down to either nothing or approaching the dividend amount. So just keep an eye on how much extrinsic value is left in the option and if it's a dividend paying stocks then you also want to factor in the dividend amount and what day it's going ex dividend.
I hope that helps. Does that answer your questions?
@@StockandOptionMyLifeOfLearning
Many thanks for the explanation.
Is extrinsic value means the prem that i need to pay in case i want to buy and close the position?
Also, if there's the case is it safer that i pick a higher strike price to roll my sell call, and a lower strike price to roll my sell put option to a farther date?
If an option is out of the money then it's price is made up of 100% extrinsic value. If the option is in the money, say for example an option is $1 in the money but it's selling for $5 in that case $4 of that $5 is considered extrinsic value and $1 is considered intrinsic value. You'd have to pay the $5 for it but its value is made up of those two components.
If you are in a losing position, even if you roll over into a new position, you still lose money right?
Hey Seng thanks for the question. The answer to your question is possibly. The reason why is because every time you roll an option, if you roll them the way I do (for a credit) then you are lowering your cost basis in the position. There are times when I end up selling a stock for less than I paid for it, but I end up with a profit in the overall position because I collected so much option premium.
Does that answer your question?
Thank you for your support!
@seng her if you are in a losing position you would roll futher into the future (make sure its enough to cover ur current losing position) until the stock goes ur way then get out
Yes that's correct. If I felt negatively about the current strike price I would also try to roll the short put strike price down. If my whole outlook of the company changed from positive to negative, then I would consider exiting the position and taking a lose. That happens very infrequently. When it has happened I'm usually able to pay for closing the position out by selling ITM puts in a new company that I feel very strongly about. I did that one time earlier this year and it worked out great!.
Covered calls for sure , I was gun slinging buying naked calls and while the ROI was great I got smoked to dust a few times aswell lol
Thank you for sharing and for your support!
Do you keep a certain percentage of your account in cash if you need roll the options?
Hey Kamran we keep cash in a couple of different accounts. We don't keep it all in one account. We are comfortable selling short put positions (or owning covered call positions) for the entire amount of cash we have set aside for option trading. However we do not use leverage. So if we have sold 100k worth of positions then we have 100k set aside in case they get put into our account.
I sold 3 covered calls for nio for 3 months out for $50 strike price. Currently at $43. I received $1100. If it hits say $55 or $60 and my shares get called away, besides the premium, do I keep the profit from $43 to $55 or whatever price it’s at or only up to the $50 strike covered call price? Thank you
Thank you for the question and your support! Since you'd be selling NIO at $50 per share, the strike price of the call option you sold, then you get to benefit from any price appreciation up to that sell price. Since you would be selling it at $50 you would not benefit from any price appreciation beyond that. However you would get to keep the option premium of $1100 that you received.
My Life of Learning thank you. So the covered calls is for December, if it hits $50 next month, can I force them to exercise it so that way I can go on the open market n buy more shares or I have to wait till expiration and have to wait it out?
You cannot force a buyer to exercise an option you have sold. If you wanted to reset the position, then you could always buy the option back and then sell a new one (if it benefited you) or just buy it back to close it out. Otherwise you just have to wait to see what happens.
My Life of Learning thank you. I bought it back on the dip n will do weekly covered calls rather than months out. When you do the math, the weekly will pay double as supposed to picking one months out
Hi Randy, do you keep records on excel sheet for each company on how much you have profited or lowered the cost? I mean do you do it manually ?
Hey Sarkis thank you for your questions and support! Yes I keep my records manually in excel spreadsheets to help keep track of my P&L in each stock. It also comes in handy when filing my tax returns. It's the same excel sheets I share snapshots of in my videos.
@@StockandOptionMyLifeOfLearning Thanks Randy, is there a way to share the template of excel sheet? as i have started following up some of your trades and would like to keep track of them. If not its all good, will make one by myself.
Hey Sarkis I will see what I can do to include a link in a future video. Thanks for the suggestion.
@@StockandOptionMyLifeOfLearning thanks Randy, for me it’s fine as I created one same as yours which was easy and quick. If that helps to your other members maybe it’s good to share. Happy trading and Merry Christmas
I enjoy your content very much and you have helped me tremendously. I encourage everyone to like, subscribe, and share! Thanks for all you do!!
Thank you 😊
I like to buy at-the-money spy or qqq 2-yr leaps and sell weekly calls against those with a 90% or higher chance of being called. I basically collect cash (bread crumbs) while I wait for the (big bread) leaps to be deep in the money as they expire 2 yrs later. Then I sell, collect cash and buy leaps again while I keep collecting little cash weekly.
Hey Jonathan thank you for your sharing and for your support! I like the continuous inflow of cash and buying LEAPs. That sounds like a great strategy!
@@StockandOptionMyLifeOfLearning Best part, it leaves your margin untouched and accessible for other trades, as we all know we can't buy options on margin. Thank you for sharing your awesome videos and insights.
Hey thanks for sharing...when you say you sell short calls against it with 90% chance of being called away....does that mean selling short calls with .90 delta? Meaning the short call is extremely deep in the money?
Do you mean a 90% chance of NOT being called away? .10 delta?
That's a great point Jonathan! Just please keep in mind that if the market moves against your long LEAP positions, and it does it in a big way, and you're using 100% of the value of your account, your account could take a big hit if you were forced to liquidate. So you just want to be mentally and financially prepared for that.