Covered Calls are the Trading Cheat Code | How to Trade Covered Calls

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[@InTheMoneyAdam]

*PLEASE NOTE* -TD Ameritrade has no assignment fees (yay!) -Traders selling covered calls typically repeatedly selling short-term OTM calls (1 week-1 month til expiration) -It is common to buy-to-close the call to roll it out to a later expiration or lower strike to collect more premium. -It is common to roll the call out even if it's ITM in hopes that it will become OTM with more time. However, this keeps your capital locked up in those 100 shares and you could miss out on more potential gains had you just bought right back in the next trading day after assignment. -It is common to sell a call below the average cost of the shares you own if you've been holding the shares for a while and haven't had capital gains yet. That's fine! Just make sure you're cool if the shares get called away at the strike. This will result in a realized loss from selling at a cheaper price than you paid, but the risk is the same: you miss out only on capital gains above the strike. You can always hop back in. -i love you

[@angburger784]

Thanks! -I love you more

[@reynerioguevara2990]

I can oly say thank you. I see $ signs every where. I hope I’m not just dreaming. I just watched the video 4x

[@averagejoey2000]

I love you too. I did a bit of research on the yield of Covered Calls on some ETFs

[@derekpelotte1378]

Can you briefly explain what you mean by roll out the call ?

[@InTheMoneyAdam]

Derek Pelotte it means buying-to-close the call you wrote while simultaneously selling-to-open a call with a later expiration. An example of when you might do this is when the call is so far OTM that it’s worth 0.01 in premium but still has some time until expiration. Is it worth waiting for it to expire before selling a new covered call just to collect that $1? Not really. It’s better to “roll” your call out by buying-to-close that call (paying the 0.01) and selling-to-open a call that’s less OTM and/or with a later expiration to start collecting more premium. I know this can be kinda confusing, LMK if you need more clarification.

[@felixf4378]

Just a few weeks ago "covered calls" sounded like calculus to me, but now it's all starting to make sense.

[@fiskenburg007]

F Fuentes Same here. Now I’m loving selling covered calls!

[@AltumNovo]

It's really simple just the language used to describe it is nonsensical

[@ladasodaexplains3355]

I understood calculus first then options 😂

[@desoztoppieter9895]

if you are too stupid to understand calculus you should stick to watching cartoons

[@dancer1]

An you help me?

[@mattshehata6840]

Dude, your channel is so amazing man. I’m a beginner trader scrambling all over the internet to try to understand strategies and to make more gains, and there’s no one else who makes this stuff so easy to understand. Simple, honest, and very knowledgeable. keep it up man!👍🏻

[@InTheMoneyAdam]

Thank you!

[@joes.8351]

Yes, I’ve watched several hours on options and was in a fog. I found this channel and things are finally starting to click.

[@basketballshots11]

are you still trading? still consider yourself a beginner?

[@obviouslymatt6452]

try optionalpha

[@jeremymeyer5552]

Inthemoney was my hero until he lost his mind on GME.

[@arthurt74]

Watched a few videos on covered calls and it was absolute gibberish. Spent 30 seconds watching the intro and understood it completely. You're an absolute legend. Thanks a ton! Selling covered calls is amazing.

[@jordanleo]

Same! I have never understood how covered calls work until now. This guy is the best at explaining on KZbin.

[@junkyard4022]

dude i was literally able to explain this to my friends right after this video because he explained it so well

[@johnsimmons302]

Shouts out to my guy making it simple

[@r.alexander9075]

This guy and kamikaze should work together

[@juanchaves6952]

I just sold my first covered call for 1/3 of a small position I have and it felt like stealing money. I wouldn’t mind keeping or selling the shares at that strike price

[@r.alexander9075]

@@juanchaves6952 which underlying did you own? I was thinking of doing something similar to SHLO since its cheap af lol

[@meinbherpieg4723]

Making it simple is just explaining it well.

[@r.alexander9075]

@@meinbherpieg4723 unless its simple to begin with, youd really have to try to make it sound hard

[@loreall.2461]

Your video was the most easily understandable video of all the videos hands down of all the I've seen here. Keeping it simple to one option contract at a time really helps us newbies. Thank you so much.

[@larryh.5101]

Don't forget that the shares can be exercised ANYTIME up to the Expiration Date. For example if dividends are announced you could get exercised before expiration.

[@joegreen4959]

10:50 "These are our strikes, going up as they go down, because why make trading easy?" Cracked up on this one.

[@thomasrichardsoniii7188]

Great video Adam. I sift through a lot of finance videos on youtube being a millennial trader myself for about 5 years and I've gotta say this one is up there in quality. Easy to digest, practical, and there's no financial guru going on and on about some esoterically obscure (redundancy intended) subject, being somewhat vague and using complicated terms. Videos like this are what youtube and young people need to get their feet wet. Bravo.

[@InTheMoneyAdam]

Thank you my dude

[@Sean-xu5ti]

I just want to say thank you. You’ve taught me more in 3 days then most guys in months. So straight forward and love that you don’t repeat yourself (like I am now, ha). I love that you don’t pad the video for time!!! Thank you so much!!!

[@timothyyoung980]

Truuuuuuu

[@Elfaia]

I've been reading about options but goddamn having someone explaining with visuals just makes it so much easier to understand.

[@bhawks]

I like to think of covered calls being a rent-to-own situation. The premium is the rent and the assignment is the purchase and if they decide to walk away you still have your house/car

[@TheBashar327]

Very good analogy!

[@alanmuther]

How often do you think one is assigned if the call expires ITM?

[@karltschonki6560]

@@alanmuther depends on the delta. If the option is priced correctly the delta id the probability % that the call goes ITM. So 0.3 delta = 30% or 0.7 delta = 70%

[@guapo2012]

Finally, someone that explains clearly how to trade covered calls

[@robertyoung406]

Your explanation was top notch. Went from feeling unsure about covered calls to feeling confident about it now. Subbed, thanks!

[@SuperAspergersMan]

Honestly one of the best videos that explain how to do a covered call. Most people jerk you around on KZbin and they don't really explain it so that you can understand. I like the poker chip analogy. Great video

[@gigawattss]

BRO, YOU RED MY MIND.Yesterday I was watching your old video about this covered calls

[@jong3122]

This helped a ton. I had a pretty rough idea of what covered calls are and what they entail, but this video broke it down to me so I know have much better grasp of what's going on. Thanks!

[@uniquesongs4244]

Wonderful Video..I have looked all over KZbin but this is the only video that explains everything! Thanks so much.👍

[@billstratman8760]

Absolutely the best at explaining trades, I've watched several videos on options and this guy ALWAYS does the best job. Well done and thank you

[@MorphingReality]

There are a lot of bad actors in this space, based on what I've seen so far, you're not one of them, good on you for recommending the educational stuff :)

[@cbrown9294]

One of the best options videos I’ve seen so far. I’m constantly explaining this is friends who think they have to BUY calls and puts rather than sell them because that’s what the brokerages push. Most of them don’t realize there is a win-win side to the game (as long as you intended to complete the co tract originally and are comfortable with the strike price you choose) Bravo! Keep up the great vids!

[@lavellelee5734]

I'm a little lost, how is it win win?

[@derekjohnson3954]

Really appreciate the quality of video production and straight forward approach, not enough you tubers like you in the finance space

[@omear2825]

Absolutely easiest explanation for covered call for new options trader, to the point, clear, no loud music, perfect thank.

[@x2dab184]

$50 for a pack of beer?... of course I'm gonna take advice from a guy with such expensive taste in beer.

[@anthonylosego]

It's one of those Coors 72 packs I'm sure!

[@logicuser8382]

x2dab184 I have never in my life bought a PACK OF BEER. LOL

[@SamuelAsherRivello]

Obviously he's a financial genius alien trying to pass as human. Thanks for the great videos.

[@JoeyDaBull]

@@logicuser8382 6 pack 12 pack 18 pack 30 pack.. yea their called packs.. i usually grab 12 pack or case.. LOL

[@tongvang724]

He has a lot of friends that he drinks with. Not just by himself, dumbos

[@gabrielrcortina]

Dude, this is pure gold. Awesome video. I had exercised two call options of PLUG at $4 each about two weeks ago, and I was going to buy a put to sell the 200 shares accumulated. I would have gotten less than 100 bucks for that, but this video showed up in my feed, and if my $4.50 call sale gets exercised, that would be awesome. I shared this video and your other beginner videos with my family. They're so simplified. I can't thank you enough but thank you so much for making videos. Keep doing what you're doing.

[@Mildgreenwow]

Hows that $4.50 sell price today? :P Ill still buy them for $4.50 each if you wanna sell.

[@paulsaltine]

@@Mildgreenwow Still buying for $4.50 each? I have some if you wanna buy.

[@Nick-xo5mm]

8 hours of KZbin University later, I’m ready to make my first trade

[@beedt714]

Get NIO

[@Nick-xo5mm]

Bee Dt714 done

[@DeathrashWhiplash]

Get NKLA

[@figment7682]

Only 8?

[@DeathrashWhiplash]

Get hive

[@bhawks]

Glad I found Adam. Really turned my investing around. Instead of chasing straight stocks I've done much better with options learned 100% from Adam. Up 35% with 8 options trades all positive. Thanks brother

[@fkncompton7124]

How is your trading going 9 months later

[@Skuggi008]

No answer = hes broke :)

[@CarlosRodriguez-eg1ic]

Dude thank you for teaching me this. I was not able to understand it for the longest.

[@jimsherod8786]

Great explanation. I haven't ever placed a covered call, but I'm getting my courage up to do it with some shares that I already own and the stock has been really stagnant. This looks like an ideal way to make some cash and hopefully I won't get assigned (since I like the stock). But if I do then it will be for a profit, so that is a win/win. As you say, you have to pick a strike price one is comfortable with for selling the stock in case you get assigned. I like your style of presenting.

[@madelinebegari5763]

This made so much sense...I've watched other longer videos that confused me more and this was just what I needed to understand everything!

[@sunnymangs]

Bro. I've been trying to learn this for days and your intro hit home. Thank you!!

[@devenp2069]

As a novus investor, you helped me understand a better strategy for exiting a position instead of simply selling it. This video, along with comments, makes me realize I have so much to learn as it seems like there are so many ways to trade. Will be on a binge watch. Earned a sub!

[@thebookbro5150]

Wow, I didn't understand covered calls until I watched this video. Thanks a ton!

[@nuggetsyl]

Thank you for making this video. It answered my questions on covered calls and how they work.

[@Dermexicano]

The way you explain things is the best one I have found so far. Great job! You have a new fan.

[@jacklarson6281]

nice even keeled level headed explanation. most of the tutorial vids out there on trading are hyped up and full of bravado. or they are trying to hook you into buying their "Seminar" good job, you got a new subber. :-D

[@cadehicks8273]

You should do a video on technical analysis for beginners. Your option trading for beginners is what got me into options, and I know you would be best at breaking down what everything means in a simple way.

[@Gravytrain894]

You, my friend, are golden for posting this vid. Detailed and to the point plus everything was understandable unlike other youtubers.. Excellent overall. Def earn my sub!

[@TravelwithRehana]

This was one of the simplest and easiest video that I watched on covered calls. Thank you breaking it down.

[@joshfatal]

Every time I open Think or Swim, I get this feeling that I'm playing EVE Online.

[@dinaray2025]

Lol 😆

[@kylebutler51]

As a guy with 20 minutes of Eve playtime on someone else's PC, I concur.

[@TheRandomDave]

docking permission requested

[@Kappachino]

It's a hard concept for people to wrap their heads around but I thought you did a good job! Also I see your production value improving (intro, sound effects) :)

[@InTheMoneyAdam]

Thanks my man!

[@feeltheburntv270]

I have a question so I bought 100 stocks of xyz @ 2.85 and then sold to open a contract at 1.00 call at a minimum 1.85/ share The stock has been down but I have been gaining money and I didn’t sell puts so I am confused can someone explained where I messed up because it was going negative when the stock was going up 🤦‍♂️

[@InTheMoneyAdam]

@@feeltheburntv270 When you sell a call, you make money on that position when the stock goes down. You're not buying a call which would make you bullish on the underlying, you're selling. If the stock goes down, then, you will incur an unrealized profit. If the stock price goes up, you will incur an unrealized loss. But if you do not buy-to-close, then that loss is not realistic because it will expire and you'll either be assigned (if it expires ITM) selling your 100 shares at the strike and keeping the premium, or you won't be assigned (if it expires OTM) and you'll keep your shares and the premium. Selling a call results in the exact opposite position of buying a call.

[@anishtheone]

Thanks for these great videos - they really help make these instruments easy to understand and use!

[@infotainment999]

Been watching the whole bunch of videos on this and your illustrations really helped!

[@markjszymanski]

This is amazing. Every other video makes this so overly complicated

[@tddavis07]

I sold my first covered call today because of your video. I enjoy watching your videos. Will you share a video on what to anticipate when calls gets exercised? Call spreads, long calls, covered calls, etc? Robinhood’s website is very vague and there are a lot of complaints about how they will close options the day prior to close in some cases.

[@quietcoma9244]

I watched 2 videos trying to understand this I'm more of a visual learner and this video really helped.thank you definitely subscribing

[@sjaw100]

Really appreciate your comprehensive explanation of covered call for beginners. Will remember your pointers to trade my first covered call soon.

[@itzLCo]

I’ve spent quarantine watching all your videos. My initial investment was low. Happy to say I’m up $500

[@anthonyfernandez7182]

what are your strategies? selling calls, buying them or wut?

[@TheALEXiSounds]

Make sure you're setting the strike price to a price you're comfortable with. I ended up losing big profits, because I was focused on the premium rather than the strike price I was okay with selling the shares. You're also effectively locked into that share until the expiration or purchase of the contract. So if you wanted to move your money around, by selling your shares, you can't until your contract is resolved. IMO these are the two biggest draw backs.

[@glennpells9712]

This man is the best at explaining options. Great job.

[@sunnyisbunny]

I was lost on covered calls until i saw this video. Very well explained and i appreciate your help!

[@howiedick6857]

" you can't lose" famous last words

[@robertshelton7740]

@@bobplaque937 except for the share price going down...

[@Jonathan-xg8lf]

@@robertshelton7740 ya but if your holding it for the long run, you shouldn't care

[@robertshelton7740]

@@Jonathan-xg8lf If you are holding for the long run, its more efficient to just hold. You don't want to be forced to sell for a strike below the current value. If the price goes down and your value is below your purchase price, how will you write a call? Bought XYZ at $100 but its only worth $90 because it went down, can't write another call for $95 and be forced to lose money. Calls ONLY work in a sideways stagnant market but thats where the speculation comes in. Thinking calls ALWAYS work is famous last words as OP said.

[@luckyplayer585]

@@robertshelton7740 exactly

[@robertshelton7740]

@@shawnlittle7527 and hopefully you have made enough on the premiums when it hits zero to cover the cost of your original investment, let alone make a profit for all that effort. I am not trying to say people can't make money with calls. People can and do. When people say there is no possible downside, it is naïve and you should know what you're doing when you write them. Play with money that you can afford to lose.

[@hanshearth7745]

Can our King tell us how he got started? His book recommendations. I am learning so much!!

[@jimsherod8786]

I appreciate your sharing your insights on options trading. You have a clear presentation and get to the heart of it without a lot of extra info. After watching your videos, and watching some others who share their expertise on options, I've successfully traded a number of covered calls this spring and summer. You're so right... if you don't get greedy and set your strike price to make a profit if you get assigned, then you really can't lose (except possibly missing out on potential upside movement of the underlying stock). Selling covered calls to exit a position is so sweet - getting paid a high premium usually for doing something you want to do. And, you have covered "the wheel" trading strategy of cycling through selling covered calls and then taking the money received from being assigned and selling cash secured puts in other videos. And I love the cool feeling of lowering my cost basis and walking away with the premium when the covered call expires worthless. Rolling the call is something I haven't had to do yet, but that is also a great thing to know that you've covered in other videos. Thanks so much for your teaching us all.

[@BD-np6bv]

Scott is right. You CAN lose. Here's what I replied with on another person asking how they can lose: You can lose in three ways: 1. You sold an extremely low strike call for pathetically low premium. For example, the stock is $50 and you sell a $20 strike for $20 dollars. Your chances of getting assigned are VERY high, almost a certainty unless the stock crashes below $20. That means WHEN you get assigned, you'll only gain $20 from the premium and then the stock gets sold for $20. You'll lose $10 difference ($20 strike price - $50 share cost + $20 premium sold) = -$10. That means you end up with only $40 ($50-$10). You've lost 1 - ($40/$50) = 20%!!!! This is by far the worst newbie mistake you can make, to sell covered calls at lower strikes than you paid your shares for. 2. You sell the covered call (any strike really), especially extremely far out calls like a year from now, and then the stock tanks because of accounting fraud or some other extremely bad news like short sellers saying the company is a fraud after hours with the stock down -10%. Well, your covered calls prevent you from selling your stock after hours, as your stock is used as collateral, so all you can do is watch in horror, pray and pump the stock on forums with the intent of dumping the stock the next day. The stock could go down even more -70% the next day, and for the next year -90%, and all you got in your name is a massive stock loss + some covered call premiums. You'd have to buy back the covered calls (at least for some little profit because the calls will be worth less due to the tankage), and then sell your stock. So in a sense, selling covered calls in this case is still a little better, but you couldn't get out in extended hours because of the covered calls. 3. You sold some covered calls a little higher, and got some premium for it. The stock rallies big time on WBS apes or some pump and dump fake news, and you panic, and buy back the covered call for A LOT more money, like 300% more than you got paid for. But you get greedy and don't sell your shares. Then, pump is over and dump commences (hence pump and dump) and the stock drops back down. You've now lost money on that covered call by buying it back for A LOT more money. If the stock keeps tanking, and then you panic sell, you'd then have two losses: From buying back the covered call for MORE than you paid for AND selling the stock at a loss for LESS than you paid for. Also, if you planned to keep the stock for over a year, for long term capital gains, well, if you get assigned, say good bye to that. You now owe taxes if you got some gain. And taxes kill growth returns. Bottom line, if you sell covered calls, you had better know what you're doing, have an exit strategy, AND learn how to read charts and do your homework on your stock positions. I teach all my Twitter followers about learning how to read charts as the MOST critical skill you can have.

[@uhmillyunaire]

you are hands down the best options teacher bro you make it so simple for noobs!

[@DaddyCaldwell]

I’ve literally just started trading around a month ago Invested $700 and lost $100 my first 2 weeks. Just buying shares and letting it sit. Hopped on KZbin and discovered you and some other channels and learned about options and different strategies. I’m up to $3000 after a week. I can’t wait for Monday’s now!

[@FmTrini]

TR P that’s a fact he just got lucky I know a guy who’s account went from 13k to 2k in a couple of days trading options gotta be vary careful lol

[@squibman]

TR P do you only do covered calls now. Or how do you decide what to buy and when? Don’t wanna be a r/wallstreetsbets kid

[@marksilva1588]

If u holding appreciated shares for less than one year and you sell a call against those appreciated shares that exceeds strike and is exercised you will not be happy with the tax result of that strategy because you would have triggered short term capital gain of an appreciated stock. Better to use selling calls secured by stock that you have held for more than one year if that stock appreciated after initial purchase.

[@stamatouvable]

I wish I watched this first when I started learning options. Would have saved me a lot of head bashing

[@niapinto1160]

I literally watched atleast 10 different videos trying to understand covered calls but video is the only one that made everything click!

[@nickmcgarvey6463]

I have done a bunch of stuff in my years, but options are totally new to me. I am currently trying out a covered call on a position I already own that has about +14% already, and I had this AH HA moment today that "I have to sell if it hits the strike" which is even higher than where it sits now, and that is actually awesome...which you reiterated early in this video. I also had no idea TD had a trading platform, I've been doing it on their website LOL. Thank you.

[@vk4633]

The most succinct explanation I have ever heard 👍🏾

[@denizc3318]

this is the best explanation of covered calls I've seen on internet so far

[@race2winss]

Honestly this video should be part of the trading options for beginners video... Im still learning and so lost on the entire concept of WHY is there options what is the purpose.. The beginner video only shows buying and I did get a idea of what was going on but once I seen this video of selling contracts, It all came together and I can finally see the big picture of what is going on here!! Good videos keep them going! subbed really enjoy your content!! Thank You!

[@rajpadhiyar7202]

This guy is awesome, made it simple & honest.

[@RedLeader327]

This makes so much sense! Going to start writing AMC covered calls. Will continue to hodl, of course

[@LANDSHARKK]

Sold covered amc call $85 strike for this Friday. Credited $4,370 . so if it doesn't hit $85 in 2 days I keep my shares and the credit. Bought 100 more shares of AMC with the credit😅

[@RedLeader327]

@@LANDSHARKK HOLY WHOA!!! And here I am happy to have written a single covered call at a $60 strike. 😅

[@ethanmuxlow6958]

@@LANDSHARKK it’s so unlikely it’ll hit 85, they credit that much??

[@LANDSHARKK]

@@ethanmuxlow6958 no, I am retarded.

[@BD-np6bv]

@@scottreesetradinginvesting7936 AMC will have to go bankrupt in about 1.5 years if apes won't let them sell shares. Their interest expenses alone are horrendous each quarter. The coronavirus is here to stay and will mutate into deadlier variants with each infection. On the other hand, if apes let them sell shares, they'll keep getting diluted to nothing. Bottom line is AMC can't make enough profit to cover for their debt. It doesn't matter how much apes buy the stock because if AMC can't make a profit and can't sell shares, they WILL have to downsize and sell off assets, or go bankrupt.

[@pauldacus4590]

7:38 This graph shows that selling covered calls is the equivalent of selling puts. I've heard that Warren Buffett actually sells puts when he is OK with being assigned the stock anyway. I read a "academic" paper a long time ago that looked at a lot of "dumb" stock & option strategies, and selling ATM puts was the one that consistently made above average returns over the very long term. I sell short dated calls against my stocks for general income or as an alternative to selling the stock outright.

[@jasonharden345]

Happy Tuesday! Thanks for the lesson!

[@alexmccain2390]

The best covered calls video on KZbin and I’ve been through 10-20 of em.

[@kY0nge]

I've been learning my ass off about options just to get to the point of me being able to understand covered calls. It feels like once you get 100 shares of a stock, this is the way to go to get some steady income.

[@tonyh1718]

It is, unless you think you have a ultra hot growth stock and think its better to let the stock go up

[@Painfulwhale360]

@@tonyh1718 yeah but if the stock is hot growth and your shares get called away you could just rebuy them same stock once it dips again and rinse and repeat

[@bennyakundi2159]

If it’s super in the money then once you sell the shares and get your premium, it probably won’t be enough to buy back 100 more

[@barbaroacosta5335]

@@tonyh1718 agree. Do it with solid stocks, but if you love it don't sell calls against it.

[@ggod4185]

so when selling a call I should never bet that it won't go down

[@ChartAction]

I tried my first covered call the other day. SNDL on Friday I bought it at 1.15 and did a strike price of 1.50 with .8 premium. I think it hit 3$ or something so I lost out and didnt gain that much. However I think I learned a ton from just that one trade. I think this covered call stuff is my kind of thing just seems like it takes a lot of capitol to do it

[@andrewoldt4524]

Thanks man, helpful video, good for rookies, enjoyed that you used the platform example

[@DanySimpleTrades123]

Didn't understand this at 1st till I experience it myself. Came back and makes all the sense in the world. This shit is a win win

[@TheStallion234]

I also like the idea of buying to close once the premium decreases by 75+%. When you do this, you pay 25% of what you originally paid, but you can sell a new contract right away, often making more within a similar time frame than if you let the call expire and keeping that 25%.

[@blocboyy4465]

This

[@kenjiedavis5238]

I'm a little bolder. I set my BTC positions at $1 ($.01/share)

[@ameritrev]

This is the video I send to people when they ask me about selling covered calls

[@alexpal8725]

hey man your videos are really great! thanks for the info!

[@vst00000]

You're the most underrated channel. Love your examples!

[@PossumLint_1927]

This is hotter than any vid on PH

[@GaneshGurumurthi]

When someone sells a covered calls the way you explained, will it show up as an open interest on the call side? If yes then, wouldn’t that show a false indication to some traders that a large volume of bet is predicted to take the stocks higher?

[@michiganebayflipper9497]

Thank you for clear easy relatable instructions subscribed!

[@gridironszn5512]

FYI that analogy at the beginning was EXACTLY what I was hoping. You should take the concept and use it to further explain options for visual learners like myself. Cheers!

[@TopJoo7]

So a covered call is similar to assigning yourself dividends given the condition that the price stays below the strike. What an interesting way to profit!

[@tastyaloha8175]

I was somewhat confused in simplifying what i was watching. Thanks to your comment things were put in perspective lol

[@retirewithoptions2913]

Soon you will no longer care about the dividend. The option premium will outpace dividend yield by a long shot.

[@tastyaloha8175]

@@retirewithoptions2913 thanks learning more every day

[@WheatBread006]

Yes, but I recommend looking into selling cash-secured puts. It is a better strategy IMO (than covered call writing). Now, if you’ve made a killing on a stock and you want to trim some, then use a covered call and at least collect that premium. Just don’t be upset when they call some (or all) of your shares away.

[@tastyaloha8175]

@@WheatBread006 thanks bro! Ill research more cash secured puts to better understand. If you have any sources you reccomend please let me know:)

[@G33KST4R]

Just traded a covered call on AMC. Long term idk if there's much life left in them since they were trading lower, even before the outbreak, but in the short term the stock is going to skyrocket once states start lifting quarantine orders. In the mean time, I'll be happily collecting premium.

[@friskyisfat]

Except that has an underlying that could very well go to $0. This strategy doesn't mean shit if you have no faith in your underlying long-term, as this is essentially a way of making extra tendies while going long on a stock.

[@journeyblue5256]

@@friskyisfat I would bet money that you hang out on WSB.

[@juliocmartinez8811]

Great explanation, you are the man, always keeping us InTheMoney

[@anujanshankaran8577]

Whenever I explain things, I put it accross on the basis that the other person dosen't understand anything. This Dude has explained it in a similar way. Also he has focussed on the point most people are looking for, that you will make money on Selling Covered Calls as long as the strike price > than your basis.

[@MrJayBowser]

Absolutely great videos and real-world perspective Question: I just started trading options and have opened a covered call. As it matures toward expiration, are there other things you can do with it to get more value out of the contracts or is it typical to just let them expire OTM and keep the premium? Thanks.

[@ColbyBlack]

This is what I’m doing and love it.

[@Painfulwhale360]

Still doing it?

[@Painfulwhale360]

…still doing it?

[@mrbard1]

I watched half this video 1 year ago today and it was like a differnt languge in a differnt universe. But now i watched again for the full length and i completely get it.

[@stephenjoseph6051]

Thank you very easy to follow cleared up some questions I had.! Thank you

[@sluggingstud89]

Oh wow! About a million options videos on KZbin in and countless hours of searching and this 15 minute video did the trick! You are awesome!

[@jf8138]

Discovered covered calls recently, and it sure is fucking amazing

[@dj_matanzaa]

Wonder if you still think this? Because I thought so too when I first started trading them and now I kinda hate them.

[@tedspeed3338]

@@dj_matanzaa Do tell...

[@dj_matanzaa]

@@tedspeed3338 It stresses me out. I've sold covered calls on positions where the stocks end up increasing dramatically in price and you're left in a predicament (because what you learn the hard way is that you miss out on any excess stock growth beyond the strike price). You can keep rolling back the call to further and further expirations but eventually you may not even be getting a credit for doing so, or you're stuck with the expiration 6 months in the future where your stocks are essentially locked up during that time period and you won't be able to sell unless you buy-to-close the calls at a loss. They're good for stable blue chip companies I suppose, and short term time-frames, but I regret my covered calls that I did on some of my growth stocks that I learned that I really wanted to hold on to. If you have the ability, and if the stock keeps going up, you can always just buy 100 more shares around the strike price to sell those instead, before the call gets assigned. But that's easier said than done, if you don't have the idle cash to do so.

[@tedspeed3338]

@@dj_matanzaa Thanks for the response

[@X11CHASE]

@@dj_matanzaa collecting relatively smaller premiums on selling unlikely-to-ever-be ITM calls would be a safer bet then, especially on something you’re holding long term anyway; I’m starting off by choosing strike prices that I find pretty unlikely during the time period I’ve chosen to try and avoid assignment Ultimately if the underlying 100 shares are something you’ve already seen a ton of capital gains on (very low cost basis relative to market current market value), then it won’t be the end of the world if you do happen to get assigned because that means the stock blew up even more-sure you’ll lose out on some extra profit if the underlying price goes above your written strike price, but again that was unlikely to begin with so you’ve probably made decent profit altogether-minimal risk to get those small & steady premiums, and won’t break your heart if you get assigned long short short Lemme know what you guys think, I just barely am getting into this and started implementing finally now that I have 100+ shares of something

[@signbusa]

Quick and great explanation. Best video about covered calls I've seen.

[@NC17z]

Very good explanation. Thanks for taking the time and posting.

[@yogisingh13]

Can you please do a lecture on selling premium. We would all appreciate it so much! Thanks in advance if you do consider it :)

[@ofir7771]

When deciding aout the strike price, Is there more potential making money from the stock going up or from collecting the premium credit?

[@Gal5195]

אני חושב שזה תלוי בסיכון שאתה מוכן לקחת, אם נניח AMD לא שווה יותר מ60$ אז אתה תהיה שמח שהאופציה שמכרת תמומש ב60$ כי היית מוכר את המניות שלך במחיר הזה בכל מקרה, והרווחת פרמיה על הדרך אתה לוקח במכירת אופציה סיכון שתפספס עלייה גדולה מהמצופה, אם אתה רוצה להרוויח פרמיה ולא לדאוג שתפספס עלייה ולכן תהיה חייב להיפטר מהמניות במחיר נמוך יותר, אתה צריך לקבוע בשביל עצמך מה המחיר המקסימלי שלדעתך המנייה תגיע אליו

[@llundber]

You’re the best. Very understandable. And scrumptious.

[@Brian-ui1bq]

Your content is pretty awesome dude. Thank you!

[@Max-tg5in]

The key thing here is not freaking out when your short position goes in the money. It will show as a loss (a big one if it's far ITM), but it will settle by expiration to only have Intrinsic value; which is a gain overall if your set up is correct. That was my first mistake trading with CC's.

[@Samsonight33]

Can you further explain

[@Max-tg5in]

@@Samsonight33 it means as long as you sell the covered call above your cost then you literally can't lose money if the stock goes beyond your covered call price. You'll only be "losing" out on further gains

[@investoengineer3811]

Max, does one need to keep cash margin if it goes ITM even through one is holding shares in account

[@Max-tg5in]

@@investoengineer3811 not if you sold the covered call above your average cost of the 100 shares you put up as collateral. Ex. You bought 100 shares at $9 and sold a $11 covered call. The stock moons and is trading at $15 at the time your CC expires. Your covered call would show a loss of $400 at expiration, but your shares would be showing a total gain of $600. So overall you have a $200 gain. Again, if you set the trade up correctly like in my example you shouldn't be in risk of any margin call

[@investoengineer3811]

@@Max-tg5in thank you Max for explaining

[@ChaceBonanno]

The hidden cost is the opportunity cost, the price appreciation that you miss out on when the underlying stock moves above your strike price.

[@storiesreadaloud5635]

The hidden cost is when the shares simply go down in value. Now you're writing calls on a much lower value and previous earnings from your calls have been wiped out by the loss in value of the underlying asset.

[@Mandinka711]

@@storiesreadaloud5635 If they are covered calls don't the options just expire leaving you with the premium, and the shares ? Are you saying that if you had AMD at $80, strike of $85 and the price fell to say, $70. You would keep the premium but as the value was now $70 it would command lower premiums for any future covered calls ? Is that what you were saying ? Because, when you said "now you are writing calls on a much lower value" sort of implied you "had to" keep writing calls. Like you were somehow bound to doing it. Thanks, if you can explain it a bit further :-)

[@storiesreadaloud5635]

@@Mandinka711 yes, that's what I meant. That's the risk - the shares go down, and if you want to do more covered calls then they might get called away at a lower price than you originally paid. You're right, you're not obliged to take that risk, but then you've lost your income while you wait for the shares to recover, which they might never do of course.

[@X11CHASE]

@@storiesreadaloud5635 that’s why it’s safer to write covered calls that are likely to expire, but also ideally for a set of shares that you have a a very low cost basis on, relative to current market value. You definitely don’t wanna risk assignment by chasing high premiums, on shares that could easily go into the red any time soon P/L wise

[@mrstephandowning]

Best explanation I heard thus far..great job teaching 👏!!

[@zacharybadasci6069]

where were you when I was trying to learn stocks 10 years ago I've learned so much so quickly from your channel Thanks Bro