Anyone do covered calls?

What are your favorite to sell covered calls

I’ve done them a lot.

I was very involved in Covered calls in the 90’s and early 2000’s but cut back a lot after the time constraint got too much.

I did some a few years ago on a few stocks that i held, had gains, wanted to sell and found some rich premiums which I thought made sense to do.

There’s some apps out can be helpful but I never tried any. Would love to know if any advice on that

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I sold AMD $80 July 29, 2022 at $2.66

I think it probably gets called but get 7% return

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Or you could replace your stock with an option. This is called a long diagonal spread or AKA a "poor man's covered call".

Go 4 months out and buy the AMD Oct 21 2022 50 call for $26. Sell the same $80 July 29 Call for $2.66. If you get called out, you now get a 24% return instead of a 7% return.

If the underlying doesn't perform, the call you sold will expire. So now you will have the potential to do the same thing for August, Sept, and Oct etc. You have 4 bites at the apple.

Just something different to think about.

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“sell the same $80 July 29 call”

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Sell the same $80 AMD call for $2.66 that lawnwrangler sold in his example.

In his example he uses the stock to "cover" his position.

In my example, I use an option.

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I do cash secured puts and covered calls...although not as much lately bagholding some stuff

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You’re doing a version of the “wheel strategy” it sounds like. It’s one of the strategies that I also use. It’s a good, proven (over time) options selling strategy.

And yeah, sometimes it takes us awhile to sell off our “inventory”, doesn’t it? Because I scan for underlyings with relatively high IV percentiles/rank (above 50%) and that often coincides with earnings, I’m sometimes playing with fire. But as long as you stick with “real” companies with real earnings, holding them (and continuing to sell calls) isn’t as painful. But sometimes you still feel like you’re getting

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I’m a bit confused when you say “sell the same $80 July 29 call” If you bought sept 50 and sell July 80, How are they the same?

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In addition to what frogtown explained (very well, I might add), notice that the call that he hypothetically bought is deep in the money. So that call strike will trade essentially like the stock, because it has substantial intrinsic value. So he has some cushion there and is paying substantially less to control the same amount of stock than if he just bought shares… and he can use short calls to chip away at his long call purchase price.

Using his example, he could sell calls at any strike above $76 (50 long call strike + his 26 call cost) and still make money.

You just have to keep an eye on the price action of the stock and how the decrease in time value affects that long call - and how a spike in IV (say around earnings time) will boost the price of the long call (which is good!). But yeah, that’s another very good strategy for certain conditions and underlyings.

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Just something different to think about.

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Thanks going to have to up option level

As long as you write a covered call at a strike you are ok with giving up your shares at, there is no downside to doing it.

The only downside is if the stock goes straight down, which would not be the CC’s fault but the underlying security.

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The only downside is if the stock goes straight down, which would not be the CC’s fault but the underlying security.

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You can miss the opportunity to sell. I was selling covered calls on F. In about a 6 week period the stock went from 19 to 25 back to 19. I had sold some calls at like $22. Well it was below $22 by the expiration date and thus they never got called away. I would have sold everything at $25 if they weren't in the options trade and actually did sell the shares that weren't in the options contract.