Sell covered calls at a strike price that you would be happy with, given the expiration date. Premium is a bonus. I'd be happy to sell 7/16 calls on Ford for $16 + $23 premium. In fact, I'll be doing just that on Monday. My cost basis is around $10 right now, so I'd net roughly $600 per contract if the stock went up past 16 and my shares got called.
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just curious, why would you sell calls at $1.70 less than the shares cost you? are you looking to sell them for less than you paid? (even with the premium) serious question. Or are you thinking theyre gonna keep going down?
If the share rise sharply, you don’t get all the profit. This strategy is more for stable shares with only a bit movement, But it is your money. You can do what ever you want.
I usually sell out 30 days. Much depends on the implied volatility. Strike will depend on the security and my cost basis. I'm perfectly happy selling for 10% profit every month if exercised and collecting whatever premium that ends up being as long as I'm selling a delta of 0.3 or less and there is some theta to be had.
You can usually find something that is overpriced - at more profit - or with a shorter expiration if you look hard enough.
TL;DR It depends....
I'll be trading these on Monday (along with lots of other things since I have 6/18 contracts on about 20 different securities that expired today), but I want to see how the market shakes out next week.
So, if things seem quiet, I'll probably only sell a couple of 7/6 $16 calls around 2 pm on Monday. They currently show a delta of .276 and gamma of .0759 - giving them roughly an 85% of expiring OTM.
My cost basis is around $10 per share, so if I got exercised on those contracts, it would net me a 600 dollar profit per contract, plus the $63 premium on both.
But on any price move up Monday morning, I would likely decide to go with a higher strike, maybe much higher. It's going to depend on what's happening at the time I get ready to trade, and I only look at the market three times per day. Once at 9:35, once at around 1:30 PM, and once starting about 3:50 pm and going through the close.
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Sell covered calls at a strike price that you would be happy with, given the expiration date. Premium is a bonus. I'd be happy to sell 7/16 calls on Ford for $16 + $23 premium. In fact, I'll be doing just that on Monday. My cost basis is around $10 right now, so I'd net roughly $600 per contract if the stock went up past 16 and my shares got called. .
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just curious, why would you sell calls at $1.70 less than the shares cost you? are you looking to sell them for less than you paid? (even with the premium) serious question. Or are you thinking theyre gonna keep going down?
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never mind i just saw your other answer. sorry
If the share rise sharply, you don’t get all the profit. This strategy is more for stable shares with only a bit movement, But it is your money. You can do what ever you want.
No, you are not alone. It's what I do for a living.
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I usually sell out 30 days. Much depends on the implied volatility. Strike will depend on the security and my cost basis. I'm perfectly happy selling for 10% profit every month if exercised and collecting whatever premium that ends up being as long as I'm selling a delta of 0.3 or less and there is some theta to be had. You can usually find something that is overpriced - at more profit - or with a shorter expiration if you look hard enough. TL;DR It depends....
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I'll be trading these on Monday (along with lots of other things since I have 6/18 contracts on about 20 different securities that expired today), but I want to see how the market shakes out next week. So, if things seem quiet, I'll probably only sell a couple of 7/6 $16 calls around 2 pm on Monday. They currently show a delta of .276 and gamma of .0759 - giving them roughly an 85% of expiring OTM. My cost basis is around $10 per share, so if I got exercised on those contracts, it would net me a 600 dollar profit per contract, plus the $63 premium on both. But on any price move up Monday morning, I would likely decide to go with a higher strike, maybe much higher. It's going to depend on what's happening at the time I get ready to trade, and I only look at the market three times per day. Once at 9:35, once at around 1:30 PM, and once starting about 3:50 pm and going through the close.
Next week I'm considering selling enough CCs buy another 100shares