Yes, this call ratio strategy is a stock recovery strategy which I tried to explain previously in your other video! But I had trouble using it on cheap stocks with low otm premium. But you gave me another idea to recover my stock if the price does come close to price I bought. I will try to find an expiry where the Atm premium is able to cover the gap between current price and my bought price. If it does go up, I can recover my capital. If it goes down again like it did previously, I would have lowered my entry price to the strike price I sold. During current bear market, my priority is recovering my capital for reinvest.
@@optionswithdavis There are so many ways to use options. Collect premiums or recover stock trades that went wrong. I think the person who created it is so brilliant! Many ppl fear options cuz they have used in the wrong way. Thank you Davis for your lessons that help to open new ideas for me to use options! 👍
Hi Davis, thanks for the excellent educational video! I have a relevant question for you: under the current market situation, to avoid the cons/risks of selling CC below the entry price you mention in the video, would you think that selling puts will be safer and the trades can easily get repaired when they go reversely? Do you have a video related to it? It would be beneficial if you could provide more ideas on tackling this topic, as plenty of investors are currently holding stocks with 50-80% high entry prices.
Yes, if you still have additional capital and you're still bullish on the stock, then you can sell CSP and other Stock Repair Strategies. I have already created a 2-part video on this. Part 1: th-cam.com/video/zfBAFGngils/w-d-xo.html Part 2: th-cam.com/video/bAQIMzeTbeQ/w-d-xo.html
Thanks Davis, another great clip. I have a position that I have sold a lot of weekly calls on and the stock is under water at present. However, since I sold all the calls, the premium, which I mostly sold atm, has offset the stock loss considerably. Moreover, I have found selling the atm on the way down has been good as I just rolled the options b4 expiration, a day before or the Friday. The weekly atm calls are over 2 percent so a hefty premium. I have not worried about early assigment that would lock in a loss. In short, I find it best to write the cc on an upward trending stock , expect the odd bout of volatility, my position was best to sell cc on the way down as you keep the premium + the stock. Timing is crucial so always lots of risk involved. It did sell off hard recently and I still wrote the cc and on a violent rally up recently I then rolled up n out to December that leaves me in a nice net positive position on the CC at Dec expiration. I like the weekly premium as it can add up plus if you keep the stock, the overall total return can be nice if managed well. I did pay a debit on the last roll up n out but that came from some of the past premium I collected. In short, my key driver for the cc is if I think the stock will continue up, and expect vol from time to time, then I like the position. Its never perfect but the current sell offs weve had are statistically unusual too so mkt conditions too are a big influencer on my position....Thanks!!
Davis, thank you so much for all that you do for the trading community. This video is super helpful. Quick question - If I've entered a 15 delta with an expiration before earnings and have had to roll (due to the strike being tested) and now find myself on a further dated option chain that does not expire before earnings, what's the best practice in this scenario? Specifically, I have HD shares that will see earnings 11/15 but my rolled-to contract doesn't expire until 12/9.Thanks again for all of your detailed videos
Thanks for the kind words, appreciate it ☺️ As for your CC, it's tricky. If the stock gaps up after the earnings, you'd likely be locking in a loss (if your CC is below your entry price). If it gaps down, then it's good. At this point, it's pretty much a gamble to see how the market reacts to the earnings. If you're afraid of it potentially gapping up after earnings, I'd just take a loss on the CC now. But if your CC is above your entry price, then you can hold on to it since a gap up would still be an overall profit and a hedge to the downside. Generally, I avoid selling CC below my entry price because of such a possible scenario.
Hi KT, the rolling idea is great for bear rallies! Thank you for it. I will see if I can apply it too for consistent income. I must learn not to be married to the stock if I'm trading it especially during current volatile times. Lol.
@@bellachan2155 Thanks Bella. As Davis points out, the key is your expectation for the stock and then strategize around that. Weeklies can provide a lot of income atm given the high extrinsic value. The perfect trade is a trending up stock sold atm n rolled steady as you get max return BUT the statistical reality with most stocks is they pullback time to time and bear mkts etc appear. Managing the cc is crucial for success. Good luck n thks.
For the ratio spread talk about at 21min mark, by selling two CC and buying one call to offset the loss. That would only cover the loss of one CC right since you only did one call ?
I have a stock I bought at 46 dollars if I sell a covered call at 32.50 I’ll get a 1800 dollar credit which will pretty much break me even if I got called at 32.50 but I highly doubt it will drop that low if it does I wouldn’t mind breaking even and rebuying the stock a 32.50
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Yes, this call ratio strategy is a stock recovery strategy which I tried to explain previously in your other video! But I had trouble using it on cheap stocks with low otm premium. But you gave me another idea to recover my stock if the price does come close to price I bought. I will try to find an expiry where the Atm premium is able to cover the gap between current price and my bought price. If it does go up, I can recover my capital. If it goes down again like it did previously, I would have lowered my entry price to the strike price I sold. During current bear market, my priority is recovering my capital for reinvest.
Nothing wrong with that! Thanks for sharing 👍
@@optionswithdavis There are so many ways to use options. Collect premiums or recover stock trades that went wrong. I think the person who created it is so brilliant! Many ppl fear options cuz they have used in the wrong way. Thank you Davis for your lessons that help to open new ideas for me to use options! 👍
You're absolutely right and you're welcome ☺️
Binge watching everything, and also being a youtube special subscriber (monthly) to your channel, just to say THANK YOU..
You're welcome and thanks for the support, appreciate it ☺️
Hi Davis, thanks for the excellent educational video! I have a relevant question for you: under the current market situation, to avoid the cons/risks of selling CC below the entry price you mention in the video, would you think that selling puts will be safer and the trades can easily get repaired when they go reversely? Do you have a video related to it? It would be beneficial if you could provide more ideas on tackling this topic, as plenty of investors are currently holding stocks with 50-80% high entry prices.
Yes, if you still have additional capital and you're still bullish on the stock, then you can sell CSP and other Stock Repair Strategies. I have already created a 2-part video on this.
Part 1: th-cam.com/video/zfBAFGngils/w-d-xo.html
Part 2: th-cam.com/video/bAQIMzeTbeQ/w-d-xo.html
Thanks Davis, another great clip. I have a position that I have sold a lot of weekly calls on and the stock is under water at present. However, since I sold all the calls, the premium, which I mostly sold atm, has offset the stock loss considerably. Moreover, I have found selling the atm on the way down has been good as I just rolled the options b4 expiration, a day before or the Friday. The weekly atm calls are over 2 percent so a hefty premium. I have not worried about early assigment that would lock in a loss. In short, I find it best to write the cc on an upward trending stock , expect the odd bout of volatility, my position was best to sell cc on the way down as you keep the premium + the stock. Timing is crucial so always lots of risk involved. It did sell off hard recently and I still wrote the cc and on a violent rally up recently I then rolled up n out to December that leaves me in a nice net positive position on the CC at Dec expiration. I like the weekly premium as it can add up plus if you keep the stock, the overall total return can be nice if managed well. I did pay a debit on the last roll up n out but that came from some of the past premium I collected. In short, my key driver for the cc is if I think the stock will continue up, and expect vol from time to time, then I like the position. Its never perfect but the current sell offs weve had are statistically unusual too so mkt conditions too are a big influencer on my position....Thanks!!
You're welcome and thanks for sharing! 👍
Davis, thank you so much for all that you do for the trading community. This video is super helpful. Quick question - If I've entered a 15 delta with an expiration before earnings and have had to roll (due to the strike being tested) and now find myself on a further dated option chain that does not expire before earnings, what's the best practice in this scenario? Specifically, I have HD shares that will see earnings 11/15 but my rolled-to contract doesn't expire until 12/9.Thanks again for all of your detailed videos
Thanks for the kind words, appreciate it ☺️ As for your CC, it's tricky. If the stock gaps up after the earnings, you'd likely be locking in a loss (if your CC is below your entry price). If it gaps down, then it's good. At this point, it's pretty much a gamble to see how the market reacts to the earnings. If you're afraid of it potentially gapping up after earnings, I'd just take a loss on the CC now. But if your CC is above your entry price, then you can hold on to it since a gap up would still be an overall profit and a hedge to the downside. Generally, I avoid selling CC below my entry price because of such a possible scenario.
Hi KT, the rolling idea is great for bear rallies! Thank you for it. I will see if I can apply it too for consistent income. I must learn not to be married to the stock if I'm trading it especially during current volatile times. Lol.
@@bellachan2155 Thanks Bella. As Davis points out, the key is your expectation for the stock and then strategize around that. Weeklies can provide a lot of income atm given the high extrinsic value. The perfect trade is a trending up stock sold atm n rolled steady as you get max return BUT the statistical reality with most stocks is they pullback time to time and bear mkts etc appear. Managing the cc is crucial for success. Good luck n thks.
Thank you Davis, very informative.
You're welcome ☺️
For the ratio spread talk about at 21min mark, by selling two CC and buying one call to offset the loss. That would only cover the loss of one CC right since you only did one call ?
I have a stock I bought at 46 dollars if I sell a covered call at 32.50 I’ll get a 1800 dollar credit which will pretty much break me even if I got called at 32.50 but I highly doubt it will drop that low if it does I wouldn’t mind breaking even and rebuying the stock a 32.50
Sorry I got 1358 not 1800 which means I’ll only lose about 200 bucks on the trade
Thank you for this video! Very simple process to follow and decisions to make.
You're welcome and thanks for your support as always! ☺️
Thanks very well explained video
Thanks for the support, appreciate it☺️
It can only get exercised if it hits the strike price correct ?
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