🚀 JOIN My Private Discord For All My Options Trades, Real-Time Stock Purchases and Portfolio Updates, Private Live Streams as well as a community of like minded investors: www.patreon.com/jj_buckner 📝 Learn How To Make $1,000+ Every Month Selling Options (Use code: OPTIONS for 50% off!): averagemoney.teachable.com/
I look at it this way, covered call strategy is when you have a neutral to slightly bullish view on the underlying stock. If the stock was hit and started rolling down, I would be out of the CC position along with the stock. Holding on to the covered call position just because you don't want to see the red on the P/L is like picking pennies in front of a stream roller.
Luck is way off the picture. Herman Jonas, a licensed FA has undoubtedly helped me make so much progress. He has guided me to identify key stocks, (options and futures) for the short term and Roth IRA, index funds, cryptocurrency and ETFs, for the long term pinpointed strategic entry points, and provided risk assessments, ensuring that my decisions align with market dynamics for optimal returns.
If you are really bearish on the stock because of some negative event and now you expect the stock to drop even more, it is not really worth it to try to roll, or repair this trade. You are better off selling ATM options to get the biggest premium and then let it get taken away so you can have a clean slate. You will also free up your capital for the next trade. But its best to do this immediately, and not let the stock drop even more. This works best after you have been assigned shares after selling puts. Again I am saying this would be something to do , if you really have become bearish on this stock, and think it will continue to drop.
I think the bigger risk here is that since it’s down so big in short amount of time, it can skyrocket pretty quick on any positive news and thus any covered calls with strike prices closer to market value, will get exercised. Average cost seems to be a sunk cost and not so relevant. If they get called away from even a low delta strike price, then so be it. It’s more than likely going to cool down and you can just back in.
happening to me right now with MPW. released news about selling assets in AUS and price jumps 10%. I'm sure it will come back down but most likely not by tomorrow when my cc's expire
Great video thanks. There's thousands of vids on covered calls but this is like the only one I've seen pertaining to a losing stock. I'm also down on a stock I'm comfortable holding. What do you think of selling a CC with a much farther out expiration instead of just 30days? With the intent of buying to close before expiration on any further significant loses on said stock.
I sell otm puts against losing stock once it meets downside resistance. Otherwise there's little point in selling calls just to lower the basis on an underdog stock because if the price recovers to where it was before or greater you just sabotaged yourself. Once a call is DEEP ITM it can't be rolled. On the other hand short puts are a safer bet if your outlook remains neutral or bullish on the underlying.
The key is selecting the correct stock, a solid one that has been trading in a range for years, determine high and low points of the range, then purchase the amount of stock based on the entry point. Sell the contract(s) based on the amount of stock purchased expiring within 30 days. If the stock falls or stays stagnant, the contracts expire worthless. Then sell another 30 contract. Calculate when the stock falls enough to purchase more that will lower the dollar amount if all shares are sold. Then sell the full amount of contracts at the price that is over the dollar average price. If the stocks stay the same price at expiration, you get to keep the additional premium. If assignment occurs, you profit from both stock sale and premium. With the right stock, it’s a Midas formula.
What a difference a year makes, PLTR is now selling at $23.49. I hope you held on to those shares. My average share price is 16.72, so I just keep writing calls.
bought 100 shares of BAC right before the banks started tanking lol, CC premium, dividends, and DCA (buying like 5 shares a week) is my current strategy
What about selling a strike that has expiration far away? I have INTC at $30 and it’s down to $22. What do you recommend? Sell a call that’s a year out??
What about selling calls OTM and grab premium while at same time selling puts with cash available and collect on the other side too? Is that called a Straddle?
Why not risk getting your 100 shares sold if you know you can buy it right after? Especially if you know the stock will rebound in the long run. If I’m maximizing premiums while the account is down is it a bad strategy? Like QQQ for example
CELH is one that did me like this $90 to $40 but my cost basis is $57 because I sold bunch of OTM csps before getting assigned. I'm long on it but will probably get out when it hits my cost basis
You’re a bag holder if the CC position goes against you. You MUST take action like making it a risk reversal before you get to a point where the hole you need to dig yourself out of is too big.
Very good video JJ. It also depends on your platform. I use Charles Schwab and have recently starting to do options. I did my first call and saw that it automatically changed my cost basis after I received my premium. Something I really like about C.S.
Why not just roll into a new contract with a lower strike price? Worst case you get exercised and you just rebuy the shares. Excluding a massive rebound from the stock, you could just keep doing this while the stock recovers, or doesn’t. Every premium reduces your cost basis from the initial loss
Why would you ever fail to exit a position that is down more than 10%?? Stops you honor are key to preserving your hard earned capital. Bag holding can cost you everything in that position - Enron, Luna coin to name 2.
I’m new to options and this happened to me. I was already doing this before I watched your video so it’s reassuring to know that I am thinking the same way as you are. I only wish brokerages would adjust cost basis according to premium collected for said stock. You just gained a follower.
Have you tried run Wheel on leveraged ETFs such as TQQQ ? UPRO? If so, would you run the wheel strategy on Both TQQQ and SQQQ? Do you have a thought on this approach?
Excellent vid - this just happened to me with DPST. To me, Options is a game of Patience with a bit of chess. I rolled up and out to recover part of my loss and I will roll out again near expiry to hopefully recapture the balance of the original loss and maybe a little gain. And I will continue to write covered calls on my shares of DPST until the premiums collected eventually pay for my original DPST stock purchase. After the stock has paid for itself, it's free money.
Thank you! Great subject that needs to be covered! I love your Rule never right covered calls below avg cost. If I want to keep my buying power requirement low, and in that situation I just I close all trades in that underlying at 15-21 DTE and just sell a Put which is one of my rules. I keep an annual log and only do that if I am still bullish and believe the stock price will increase. If IV is low i do a PMCC.
Great video! This is stuff everyone needs to know before they ever start trading options. It’s not a matter of if but when you’re eventually in this position, especially if you’re trading volatile, low market cap companies. Another good strategy is selling 2-3X the number of calls for the shares you own and buying 1-2x of the calls at a higher strike price. It’s a combo CC and call credit spread. Defined risk and you’ll bring the cost basis down a lot faster. You just have to be conservative and tactical writing the spreads. And always remember rule #1… only trade stocks you’d be comfortable holding long!
Thought I was hallucinating it, but nope you're wearing a Kahala Cross Fit shirt. Haha I live like 5 minutes away from that place. You from Hawaii or something?
Great Video on some good strategies.. at this time im watching ... PLTR is WAY Up... so i hope you either averaged down and/or held.. cuz you are in the GREEN now bro!
If you're in that position it means you chose a high volatility company or at least high enough for selling covered calls. It happened to me and on top of that I put a lot of money on it and to make it worse it was a low volume one 😂, it had bimonthly options only lol, I suffered and I couldn't reach the average price, I took a big loss and then I discovered the broker let's you buy stock with cero balance lol, I could've saved it with a Thousand dollars. Anyway, if you're gonna sell covered calls and make that your strategy I recommend doing it with DIVIDEND PAYING companies so you don't feel bad holding onto them, also they're really low volatility and the dividend will help you with that average price not to mention it feels good getting that payment 😂
hope you still have palantir stock by now. . because they are 28 now as today July 21. you are on 2X profit. I was enjoy and funny while watch your video, if owning stock is down 50% that is sad..
Writing CCs below your cost basis… AKA dancing with the devil! 👹 Definitely not a move for rookie traders or traders without nerves of steel at any level! 😂
Concluding 2023 with a 20% decline in the S&P 500, long-term investors find a promising entry into 2024. Noteworthy ETFs include: $VOO for S&P 500, $VTI for total US market, $QQQ for tech growth, and $SCHD for growth with dividends. Calculating my annual dividends, I'm thankful for $167k-attributing it to discipline and focus.
Off course, but Just because there are opportunities in the market doesn’t mean you should go in blindly. To understand the potential factors that contribute to your financial growth, I'll advise you to seek the help of a professional.
Indeed, I did make use of a financial counselor. As I get closer to retirement, their advice has been really helpful. I thought compound interest on index funds wouldn't be sufficient because I started late. It's amusing how I've done better than colleagues who have more years of investment experience. I've profited more than $886k tax free.
@@hunter-bourke21 I've been thinking about going that route. I have a lot of stocks that I have maintained, but they are beginning to lose value, so I'm not sure if I should hold onto them or sell them. I feel hiring your investment coach would make it easier to restructure my portfolio.
Much credit goes to *Camille Alicia Garcia* for her significant contributions. She maintains an online presence, making it easy to locate her. While other advisors might pose challenges to find, Julia has proven to be an excellent mentor throughout the year.
Appreciate this recommendation, hopefully I can get some insight to where the market is headed and strategies to beat the downtrend with when I hear back from Camille.
![The 2 Major Reasons Why You Shouldn't Trade Covered Calls [Episode 66]](/img/n.gif)
🚀 JOIN My Private Discord For All My Options Trades, Real-Time Stock Purchases and Portfolio Updates, Private Live Streams as well as a community of like minded investors: www.patreon.com/jj_buckner
📝 Learn How To Make $1,000+ Every Month Selling Options (Use code: OPTIONS for 50% off!): averagemoney.teachable.com/
I'm watching this 3 year later hope you still got those pltr.
Sold 500 right before earnings at 41. Regret it so much. It's at 67 now.
I was thinking the same, but if we think that way, no oone will write covered calls.
Right!
80 now
I look at it this way, covered call strategy is when you have a neutral to slightly bullish view on the underlying stock. If the stock was hit and started rolling down, I would be out of the CC position along with the stock. Holding on to the covered call position just because you don't want to see the red on the P/L is like picking pennies in front of a stream roller.
Trading has been rather rewarding to me and I've learned that getting a good return is very much attainable if you know your way around it.
Luck is way off the picture. Herman Jonas, a licensed FA has undoubtedly helped me make so much progress. He has guided me to identify key stocks, (options and futures) for the short term and Roth IRA, index funds, cryptocurrency and ETFs, for the long term pinpointed strategic entry points, and provided risk assessments, ensuring that my decisions align with market dynamics for optimal returns.
To me, trading is not worth it and I know that's the same mindset holding me back from taking a step forward in my finances. It’s all gambling.
Hi how can I get through to him? I’m new to options and it’s just too complicated for me.
Hermanw jonas that’s his gmail okay
Thanks for the lead. I was able to get in touch with him and we spoke at length. I'm getting started right away!
Only sell covered calls where you are long-term, and if price plummets you are willing to DCA. Now you have 200 shares and can sell two options.
I don’t mind selling calls below my basis. If the underlying goes above my strike price I will just roll the option up and out. Pretty chill
Absolutely!
This can be difficult on some stocks.
@@christophertaylor3150why
so dangerous... you will probably get burnt
If you are really bearish on the stock because of some negative event and now you expect the stock to drop even more, it is not really worth it to try to roll, or repair this trade. You are better off selling ATM options to get the biggest premium and then let it get taken away so you can have a clean slate. You will also free up your capital for the next trade. But its best to do this immediately, and not let the stock drop even more. This works best after you have been assigned shares after selling puts. Again I am saying this would be something to do , if you really have become bearish on this stock, and think it will continue to drop.
I think the bigger risk here is that since it’s down so big in short amount of time, it can skyrocket pretty quick on any positive news and thus any covered calls with strike prices closer to market value, will get exercised. Average cost seems to be a sunk cost and not so relevant. If they get called away from even a low delta strike price, then so be it. It’s more than likely going to cool down and you can just back in.
That could happen but also could not… All just depends on your risk tolerance.
happening to me right now with MPW. released news about selling assets in AUS and price jumps 10%. I'm sure it will come back down but most likely not by tomorrow when my cc's expire
anyone know where to find a free online cost basis page to keep a running total? not a 1 time calc. not a spreadsheet.
if you get assign you can always re-buy the shares if the price is good still.
always nice to go back an watch old videos from you
Been doing this with AMC for a few years, where it's paid for all the AMC shares I own plus additional profits. Great video.
Hopefully you're still bag holding your $PLTR shares......(as of 8/24/24) current price $31.78/share
Great video thanks. There's thousands of vids on covered calls but this is like the only one I've seen pertaining to a losing stock. I'm also down on a stock I'm comfortable holding. What do you think of selling a CC with a much farther out expiration instead of just 30days? With the intent of buying to close before expiration on any further significant loses on said stock.
If your loosing sell otm cc on position to dollar average down
I sell otm puts against losing stock once it meets downside resistance. Otherwise there's little point in selling calls just to lower the basis on an underdog stock because if the price recovers to where it was before or greater you just sabotaged yourself. Once a call is DEEP ITM it can't be rolled. On the other hand short puts are a safer bet if your outlook remains neutral or bullish on the underlying.
The key is selecting the correct stock, a solid one that has been trading in a range for years, determine high and low points of the range, then purchase the amount of stock based on the entry point. Sell the contract(s) based on the amount of stock purchased expiring within 30 days. If the stock falls or stays stagnant, the contracts expire worthless. Then sell another 30 contract. Calculate when the stock falls enough to purchase more that will lower the dollar amount if all shares are sold. Then sell the full amount of contracts at the price that is over the dollar average price. If the stocks stay the same price at expiration, you get to keep the additional premium. If assignment occurs, you profit from both stock sale and premium. With the right stock, it’s a Midas formula.
Some subtle things
If it rolls to next year. Cost basis needs to factor in tax you paid on the short term call premium..
What a difference a year makes, PLTR is now selling at $23.49. I hope you held on to those shares. My average share price is 16.72, so I just keep writing calls.
bought 100 shares of BAC right before the banks started tanking lol, CC premium, dividends, and DCA (buying like 5 shares a week) is my current strategy
It happens to the best of us lol. I’d say that sounds like a solid strategy to me.
What about selling a strike that has expiration far away? I have INTC at $30 and it’s down to $22. What do you recommend? Sell a call that’s a year out??
Just roll your short call to increase your breakeven point and that's it! No more complications.
What about selling calls OTM and grab premium while at same time selling puts with cash available and collect on the other side too? Is that called a Straddle?
A share here a share there? What about brokerage fees?
Why not risk getting your 100 shares sold if you know you can buy it right after? Especially if you know the stock will rebound in the long run. If I’m maximizing premiums while the account is down is it a bad strategy? Like QQQ for example
Ok , questions if you lower by putting more can you keep lowering to almost average cost ?
CELH is one that did me like this $90 to $40 but my cost basis is $57 because I sold bunch of OTM csps before getting assigned. I'm long on it but will probably get out when it hits my cost basis
I own 100 shares of wkhs @4.44/share. Now it's @ $1.30/share. Any suggestions for me?
Sell a $1 call and be done with it, get a better stock or maybe SPLG etf so you don't lose like 70%.
put it in the filing cabinet and stop looking at it. Put new money somewhere else. Today is a new day.
I've done all of these things. They all work. You're advice is legitimate
You’re a bag holder if the CC position goes against you. You MUST take action like making it a risk reversal before you get to a point where the hole you need to dig yourself out of is too big.
Very good video JJ. It also depends on your platform. I use Charles Schwab and have recently starting to do options. I did my first call and saw that it automatically changed my cost basis after I received my premium. Something I really like about C.S.
Why not just roll into a new contract with a lower strike price? Worst case you get exercised and you just rebuy the shares.
Excluding a massive rebound from the stock, you could just keep doing this while the stock recovers, or doesn’t. Every premium reduces your cost basis from the initial loss
Why would you ever fail to exit a position that is down more than 10%?? Stops you honor are key to preserving your hard earned capital.
Bag holding can cost you everything in that position - Enron, Luna coin to name 2.
use weekly calls
any thoughts on selling covered calls on WBA
I have done writing cc below average if it broke support.. and at ur 300 shares too easy to average down...
I’m new to options and this happened to me. I was already doing this before I watched your video so it’s reassuring to know that I am thinking the same way as you are. I only wish brokerages would adjust cost basis according to premium collected for said stock. You just gained a follower.
great advice
Have you tried run Wheel on leveraged ETFs such as TQQQ ? UPRO?
If so, would you run the wheel strategy on Both TQQQ and SQQQ? Do you have a thought on this approach?
Good informative video without bs. 👍
This is gold here. It might be down but you are not out.
6:10 some stock can go lower than 50 percent...90 percent as in Hydrogen and Lucid that i hold.....
Not sure you did a video yet on this. What is your advice when your stock blows past your covered call strike price?
if you want to keep the shares buy the calls back. else let them assign but you miss out on the rally
A year later that plalantir bag you were holding is filled to the brim with cash
I would like some help with some more details. I have an example today!
I know this is an old thread, but, watching this now and today seeing PLTR🎉 stock is around $58 is such a nice reflection. Hope you kept your long.
Excellent vid - this just happened to me with DPST. To me, Options is a game of Patience with a bit of chess. I rolled up and out to recover part of my loss and I will roll out again near expiry to hopefully recapture the balance of the original loss and maybe a little gain. And I will continue to write covered calls on my shares of DPST until the premiums collected eventually pay for my original DPST stock purchase. After the stock has paid for itself, it's free money.
That's a dangerous game you play.. So how did DPST end up? I see the stock did recover since your post, so maybe you got away with a profit.
You shirt say Kahala CrossFit? You from Hawaii?
Just sell a call credit spread against your shares. Easier to roll up. Or if it rallies you only lose the spread width.
A lot of people buy protective puts just in case. I do have problems with stops not triggering though.
Thanks, just what I needed today since am worried to fall below 25,000 on RH and my Amz shares dropped a lot yesterday. :) Thanks.
Awesome video!! Thanks, man!
Roll ur CC to avoid assignment, Its that simple.
Yes, I know.
If you roll it, don't u take the loss right there?
do you only get assigned near to expiration or at expiration?
Thanks Double J
Nobody is okay holding a stock and is down 50?
note from the future: PLTR trading at $30. GG
I sell calls below my cost, but have $ to buy if in the money at the end of the week.
Thank you! Great subject that needs to be covered! I love your Rule never right covered calls below avg cost. If I want to keep my buying power requirement low, and in that situation I just I close all trades in that underlying at 15-21 DTE and just sell a Put which is one of my rules. I keep an annual log and only do that if I am still bullish and believe the stock price will increase. If IV is low i do a PMCC.
I hope you're still holding Palantir!
I hope you're still holding your PLTR sha, es bro.
Great video! This is stuff everyone needs to know before they ever start trading options. It’s not a matter of if but when you’re eventually in this position, especially if you’re trading volatile, low market cap companies.
Another good strategy is selling 2-3X the number of calls for the shares you own and buying 1-2x of the calls at a higher strike price. It’s a combo CC and call credit spread. Defined risk and you’ll bring the cost basis down a lot faster. You just have to be conservative and tactical writing the spreads.
And always remember rule #1… only trade stocks you’d be comfortable holding long!
Watching in Dec'25. The first thought: "Stop!!! DO NOT SELL PLTR"!!!!
Thought I was hallucinating it, but nope you're wearing a Kahala Cross Fit shirt. Haha I live like 5 minutes away from that place. You from Hawaii or something?
It was up recently so assuming you sold lol - thanks!
Great Video on some good strategies.. at this time im watching ... PLTR is WAY Up... so i hope you either averaged down and/or held.. cuz you are in the GREEN now bro!
Hey…. I’m from the future, I just looked at $PLTR…. 11/9/24…… I hope your still bag holding. $58.86 per share 😮
Other option: buy to close at a loss.
If you're in that position it means you chose a high volatility company or at least high enough for selling covered calls. It happened to me and on top of that I put a lot of money on it and to make it worse it was a low volume one 😂, it had bimonthly options only lol, I suffered and I couldn't reach the average price, I took a big loss and then I discovered the broker let's you buy stock with cero balance lol, I could've saved it with a Thousand dollars. Anyway, if you're gonna sell covered calls and make that your strategy I recommend doing it with DIVIDEND PAYING companies so you don't feel bad holding onto them, also they're really low volatility and the dividend will help you with that average price not to mention it feels good getting that payment 😂
I am watching trying to figure out why he's wearing a KAMALA shirt hahahah
yes - Walgreen Boots - happening to me
I’d sell the $9.5 a month out and just roll it up and out if you needed
Man I hope you held PLTR!
my god if you hold the stock now in 2024 you get 300%
hope you still have palantir stock by now. . because they are 28 now as today July 21. you are on 2X profit. I was enjoy and funny while watch your video, if owning stock is down 50% that is sad..
Writing CCs below your cost basis… AKA dancing with the devil! 👹
Definitely not a move for rookie traders or traders without nerves of steel at any level! 😂
Thats me!!
Why do options traders not realize that there is something called a stoploss? Always use a stop. Holding a 50% bag is amateurish.
Ah, the expert in an "amateur" video, welcome, my friend
Seems like there is something wrong with your audio seems like it talks alot and essentially says nothing.
Hope you still have it smh
Judas, that stock will be $150 by 2030. Too bad you could not have held.
Hope u still holding ur shares lol
Concluding 2023 with a 20% decline in the S&P 500, long-term investors find a promising entry into 2024. Noteworthy ETFs include: $VOO for S&P 500, $VTI for total US market, $QQQ for tech growth, and $SCHD for growth with dividends. Calculating my annual dividends, I'm thankful for $167k-attributing it to discipline and focus.
Off course, but Just because there are opportunities in the market doesn’t mean you should go in blindly. To understand the potential factors that contribute to your financial growth, I'll advise you to seek the help of a professional.
Indeed, I did make use of a financial counselor. As I get closer to retirement, their advice has been really helpful. I thought compound interest on index funds wouldn't be sufficient because I started late. It's amusing how I've done better than colleagues who have more years of investment experience. I've profited more than $886k tax free.
@@hunter-bourke21 I've been thinking about going that route. I have a lot of stocks that I have maintained, but they are beginning to lose value, so I'm not sure if I should hold onto them or sell them. I feel hiring your investment coach would make it easier to restructure my portfolio.
Much credit goes to *Camille Alicia Garcia* for her significant contributions. She maintains an online presence, making it easy to locate her. While other advisors might pose challenges to find, Julia has proven to be an excellent mentor throughout the year.
Appreciate this recommendation, hopefully I can get some insight to where the market is headed and strategies to beat the downtrend with when I hear back from Camille.