💰 How to Sell Covered Calls And Generate Weekly or Monthly Income - in only 14 mins!

[@RickOrford]

Looking for a good options screener/scanner - check Options Samurai - bit.ly/3bfS8p8 - It helps me find winning trades, time and again. Amazing tool! Also, feel free to reach out for a 1-on-1 call about options.

[@itsmedavidd]

out of all the videos on covered calls this is the best. Which is sad because it should be seen more but it hasn't because you're channel hasn't blown up.

[@RickOrford]

Thanks for the kind words! I'm sure the word will get out :)

[@mudbonejames9313]

There are a few things i like here. He goes slowly. He gets to the point without the drama. he uses real world examples. This reduces the learning curve. He's not showing all the lavish things he bought with the money. Last but not least, doesn't hang you out to dry to order his course and make you one of his students. However, I'd be one of his students. I finally feel like i can learn this and get my first trade in without feeling nervous.

[@RickOrford]

Thanks for the kind words! How about joining me on my discord? rickorford.com/discord - see you there!!!

[@KarenHudson-e7q]

I've been trying for months to understand covered calls and this video finally broke through!!! Thank you!

[@RickOrford]

Excellent!!!!!! Let me know if you have any other questions :))))

[@tonystaton7494]

What youre calling a PMCC is really a call credit spread. A pmcc is when you buy a deep in the money call LEAPS contract and then sell short term call options against it

[@kikilynn1167]

What he's describing here is actually a vertical call credit spread. A Poor Man's covered call is a diagonal debit spread that combines buying an in the money call that expires in 180 days or more and selling an out of the money call that expires in one week to 60 days. So a pmcc has different expiration dates and you have to pay money to get it. Whereas with the vertical credits spread, you instantly earn premium.

[@ralstonwhite429]

Another great video. Well explained. Thanks again Rick.

[@RickOrford]

You’re most welcome! If you have any questions, do let me know!

[@saturn599]

Omg, I watched so many videos on covered calls. I am so confused. They didn't answer what I need to know. I was very lucky to find your video, it explained everything I need to know. It's simple and straight forward. I bought my first covered call expiring in a month. I hope I did it right. I will come back and watch your other videos later. I subscribed so I don't miss out. Thanks Rick.

[@RickOrford]

You bought a covered call??

[@saturn599]

@@RickOrford No I sold covered call.

[@ewlinitis]

Let me guess , you're trying to help your buddy's channel . Because there are lots of great coveres calls video out there

[@saturn599]

@@ewlinitis Sorry, I don't even know this guy.

[@lit3585]

​​@@saturn599how was your experience trying selling covered calls? Worth it?

[@Myscentsei]

Im getting started. What baby steps does a rookie take? Sell PUTS?

[@frankdepena232]

Excellent Rick. Love you man. You are the best teacher.🙂

[@joed8459]

Very nice easy explanation of covered calls. Great video !

[@SatyaSanathani]

Great video. Thank you. One question though on the bonus portion of your video where you sell a covered call without the underlying asset. What if the stock price goes to $321, but it does not go above $322? 1. Since you do not have the underlying stock to sell, how does this work? 2. If the stock price never goes above $321, your call options that you "bought" is worthless.

[@ivanvighetto2486]

1. You need to sell it at $320, after call option exercise you'll be short of 100 stocks and you have to buy them on the market. If the price in the meantime drops, is good for you. If the price rises, is bad. Generally, if you buy at the market opening the price will be very near to $321 and the payoff of your trade will be near 0 ($200 from the sold call option, $100 spent for the bought call option, $32000 from selling the underlying stock,-$32100 for buying the underling stock 2. Yes

[@reikitube]

You are a great teacher…

[@dhirenshah2000]

Great video, very informative, conplex concepts explained in a easy to understand way.. 👌👍

[@gerrigg]

So it’s not a poor man’s covered call if in your example the stock is 321, then you would to have to buy the stock to sell for the first option correct?

[@flipkoofx1137]

Thank you! Great video! Can you close an option contract way before the expiration date? Let say I bought a call option with a strike price of $10 with. 2 weeks expiration but then the next day the price of the underlying stock jumped to $15, can i close the contract then to keep the profit? Or do i need to wait until expiration day?

[@RickOrford]

Yep, you can always buy back the option for a lower price (if it exists in the market) to close out the trade! However, closing out a covered call (successfully) will usually need the stock to trade below the strike.

[@m2lookmtn358]

A vertical spread is NOT a PMCC. A pmcc is buying a deep in the money and long term expiration call option and selling call options against your right to exercise the option you bought.

[@RickOrford]

Thanks for your comment, but, respectfully, I disagree. As does Schwab. help.streetsmart.schwab.com/edge/1.6/Content/Vertical%20Call%20Spreads.htm

[@Rob-db4cc]

@@RickOrford You are WRONG. Your PMCC is a Bearish call credit spread. I suspect you deleted my prior response. "Mike and his whiteboard" can help you out with a PMCC explanation.

[@smartymcfly3957]

This is exactly what I needed to know! Sold my first covered call today! Wish me luck and that it expires worthless. 🤗

[@RickOrford]

Just saw this - how did the trade work out?

[@vanjia-w7z]

Can you sell four of five strike prices of covered call during the same expiration day ? What is the typical margin requirement for such a strategy ?

[@lamontlenz]

I have 100 shares of stock. I'm looking to utilize this opportunity. I'd like to talk to some for step by step on how and where to sell as an option contract.

[@RickOrford]

How about on my discord? Rickorford.com/discord

[@boca812]

HI Rick, thank you for the great videos. I do need a little clarification regarding your "Bouns Tip" the Poor Man's covered call. Since you don't own the stock, and SPY is selling over $320, I'll be forced to sell. But I don't have the stock. You said I'm covered with the other covered call. So does that mean I need to exercise the covered call I bought so I have the stock to sell? If I don't exercise it, by its expiration date, the stock could fall below $320. Maybe I'm not quite understanding how I can be forced to sell if I don't have the stock. How do I get it to sell?

[@darylking265]

The way a vertical spread works is that you sell one call option at a strike price that's out of the money and buy another call option with the same security and expiration FURTHER out of the money. For example, if SPY was currently priced at $340. You might sell a call option with a strike price of $345 and buy a call option with a strike price of 346 dollars. The option you bought would cost less than what you sold the 345 option for so you'll get a credit. If SPY trades less than $345, you're in good shape. The risk is if it trades ABOVE $345. Suppose SPY goes up to $350. Assignment usually doesn't take place until a few days before Expiration because the option can usually be sold for more than the $5 profit gained by exercising the option. If you are still holding the position on the day of expiration and SPY is above the 345 strike price, you'll have to exercise the 346 call option to cover the 345 position. In effect, you'll buy 100 shares at 346 and sell 100 shares at 345. You'll lose $100 per call option no matter how far above $345 the SPY trades at. Ideally, you will want to close the position just before expiration so that there's less chance that the sold option will be assigned and you'll have to exercise the option you bought. The Poor man's covered call carries more risk but can be done with considerably less money in your account.

[@investmotivation1014]

Great walk through thanks for sharing

[@RickOrford]

Thanks kindly!

[@terrenceh.9248]

Hi, nice video. How about if the SPY price close at $321. My sell call option is obligate. It is I need to force to sell the buyer the 100 share of SPY? But the thing is I don't have the stock in hand, what will happen?

[@RickOrford]

If you’re selling a covered call, then you must already own 100 of the shares for each contract- in your brokerage account. Assignment is decided by the buyer - and you’ll have no choice but to sell your shares at the strike price, should they assign.

[@terrenceh.9248]

@@RickOrford Thanks

[@markherring3513]

Can u make a video on how to do covered calls and RETAIN your shares? I have 3,000 shares of Boeing and I am only cleared with the brokerage firm to do covered calls. I want to do covered calls but I also dont want to lose my shares. (i also have 2000 of apple, 1000 of amazon, 500 of google and 450 of tesla).....I want to do covered calls on all of them and keep the shares in the process.....how do i accomplish this?

[@stevofromiowa]

You would have to buy back the contract you sold at some point before expiration. That will usually result in a loss on the option as you're buying it back for more than you sold it for, but you still have your shares. This is why strike price selection is important. They greater the contract premium, the more likely it's going to expire ITM. (in the money)

[@markherring3513]

@@stevofromiowa thanks…i got it under control now.

[@petsloveonly]

Just to clarify are u saying worse case u have to sell ur 100shares at a profit? And if thats the case ...is that profit enough to allow u to buy back your 100shares at this new market price?

[@RickOrford]

With a covered call, if the shares rose above the strike at expiration, your shares will be sold- at the strike price. That’s why it’s important to ask yourself, before going into the trade, if you’re happy with that scenario.

[@SeeItHere]

Your poor man’s covered call example is missing a very important detail, is it not? What happens if price closes @ $320 or $321? The sold call option @ $320 gets exercised and the bought contract expires worthless. Isn’t that more than a $1.00 loss?

[@daytonpyro]

so do i sell to open or sell to close to start with? i have 100 shares of amc.....also if amc is 38 bucks and i sell a call for 30 bucks. am i hoping it goes down? that part is confusing. i thoguht a call means you think the price will go up. and a put means down. and IN THE MONEY is more risky. right? so confusing

[@johna30]

Can you cover a scenario for selling an "In the money" covered call?

[@RickOrford]

Sure. An "In the money covered call" simply means the strike price is lower than what the stock is trading at. And, if the strike price is lower than the stock at expiration, the covered call sellers shares will get called away... But, they'll still get to keep the premium!

[@johnnya590]

@@RickOrford Thanks for the explanation. To rephrase my question, I'm trying to better understand in what situation someone would want to sell an ITM covered call? and in what situation would someone want to buy an ITM call? For example: Say I have GME and I am ok with getting rid of it. Does it make sense for me to just sell it or sell an ITM covered call? The latter makes more sense to me, but I'm wondering if there is something I'm missing. Thanks!

[@RickOrford]

@@johnnya590 I can't see too many reasons that an investor would sell an "in the money" covered call... perhaps the investor took the position that the stock was going to fall, wanted to collect an oversized premium, and sell the stock at the same time. In the GME example, it's currently trading at $186.62. If you were to sell an ITM call against 100 shares of GME, perhaps at a $180 strike, it would mean that your shares would be called away at $180/share at expiration IF the stock continued to trade above $180. There would also be capital gains to consider as well. It's certainly something to think about!

[@More-right-rudder]

@@RickOrford if it is in the money that means they can exercise the option, not necessarily they will.

[@BizarroLanigirod]

if you're extremely bearish on the stock or if you're average price of the stock is lower than the strike price, selling ATM calls makes sense if you don't mind selling your 100 shares.

[@rmsamonte]

Great video! Very informative and easy to follow. However, I have a question. If I am selling one covered option, can there only be one buyer? Can there potentially be more than one person interested in my option? For example, what if there are 2 people interested? Does that mean I need to own 200 shares? Because I only own 100 shares I'll need to buy 100 more to cover the second buyer if the price of the stock becomes in the money.

[@henrykaufman5177]

Your are selling your call into a pool, not a specific buyer. That’s kind of hard to understand at first but the answer to your questions is no. You only need 100 shares :)

[@cogar313]

Very nice

[@antoinepirson8585]

Good idea to use CC's to make some money on AMD that has gone down a lot.

[@RickOrford]

Very true!

[@darylking265]

There is one other risk in selling covered calls not mentioned in the video: If the market price of the stocks you have drops, you'll find that you can get little income from the calls. What you do NOT want to do is sell call options for less than the cost basis of the underlying stock or security. As of now in Nov of 2022, if you had owned SPY at the start of the year, it was worth about $480. As of today (Nov 23, 2022), it's about $400. A $432 call option for 1 month out (Dec 23) is 47 cents per share or $47 per contract. A call option for $480 with a Dec 23, 2022 expiration date is 2 cents per share or $20 per contract. As the price of stocks drop, so does the premium that you can get on a call option.

[@Omega782]

Not entirely true

[@yaimavol]

But if you think the price may drop, you can sell them deep in the money

[@bernorrisrozier8666]

Do you zoom coach on this? I don't understand how to actually exercise the contract. If I do the poor man's style and actually have to sell the stock.

[@RickOrford]

I can go through this, one on one. Just send me an email.

[@kenrobinson3725]

I’m a newb. But. If spy is at 321 at expiration. It’s being called How do you produce the shares . The 322 you bought is worthless. Please respond.

[@RickOrford]

If you’ve sold a covered call, and at expiration the stock price is above the call option strike, the buyer of the call will have the right to buy your shares at the strike price. For example: Say you sell a call option that expires Friday with a $322 strike. Fast forward to Friday- if the stock is $350 (any amount >$322) you’ll have to sell them for $322 because that’s the contracted price! Investors who don’t want to be called sell call options “far out of the money”. Using the same $321 stock example as before, a covered call seller might sell a call option that expires Friday with a $360 or $370 strike. Remember, however, the further “out of the money” one goes, the lower the income.

[@kenrobinson3725]

Thanks for the reply. You were talking about poor mans covered call when you gave the example. Sold the 320 and bought the 322. What happens if it closes at 321 The reason for the PMCC is not having the money to purchase the security. . I thought we should buy 320 and sell 322 or higher .Again I’m new to the business. Sold a couple secured puts but haven’t been assigned yet. Thanks again

[@RickOrford]

If someone sells a $320 and buys the $322 - this is a PMCC. If the stock closes at $321 at expiration, they will keep the premium (from selling the $320 call), and lose $1 on the $320 call (because they'll have to buy it for 321/sell it for 320), plus there will be a loss of anything they paid for the $322. With a PMCC, maximum losses are the difference between the two calls (In this case, $2 * 100 * # of Contracts). So, PMCC investors will want to avoid getting called/excersised. Hope this helps!

[@kenrobinson3725]

Rick. Last question. I promise. I just don’t want to make any huge mistakes. So , you were not covered at 321. Therefore if your customer sold the 320 and bought the 330 for example. Customer is not covered from 320 to 330 I’m thinking buy 320 and sell 330 or any other strike above 320 and your always covered. Yes, negative outlay but will benefit from 320 to 330 Most you can lose will be difference from what you pd and the premium you collected from 330 That was my last question. Thanks for all the info.

[@RickOrford]

Buying the 320 and selling a 330 is not a PMCC. Rather, it’s a debit spread - completely different strategy with different risks and rewards! You can read more about debit spreads here: en.m.wikipedia.org/wiki/Debit_spread

[@ndreravi4576]

THANK RICK. Speak Slow Talk low. WHAT do you thinks about PFE ?

[@RickOrford]

Good advice! As for PFE, I don’t really cover it, sorry!

[@gosikh]

There is a very important point in the poor man’s example that you did not cover. What happens if the price is 321?

[@christianf.8973]

What do you think of PMCC ?

[@BenTrem42]

You really gotta include the URL of your blog in the Description. For each video, yes? cheers *--ben*

[@lucrtrvl]

Excellent content. Thank you. Sub.

[@nabarunsarma7125]

Amazing Sir

[@Shoim]

I've tried your method this week by selling an covered cal in Tesla and I will most likely loose $8000. No thanks.

[@llbreaks9253]

Hello i am new and have a small account.. is it feasible for me to buy stocks lets say for 10 bucks and under x100 and start out small selling covered calls? I've done a lot of reading and watching videos and this one made more since than anything i have seen yet... thanks again.

[@RickOrford]

The price of a stock is irrelevant. However, it might not be wise to buy a stock just because it’s cheap! Having said that, to sell a covered call, you will need to have at least 100 shares of the underlying security!

[@llbreaks9253]

Think I didn’t ask the question right…. Thanks for the reply

[@jjchuy6322]

Hello Mr Rick that is not a poore's man cover call

[@bitterend14]

Pls bring back the black background. Much easier to see/follow

[@RickOrford]

Noted!

[@bitterend14]

Dont post on social but evangelize VI at every opportunity