How To Sell Covered Calls (Easy Monthly Income)

How to sell covered calls for passive monthly income - learn options trading
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Covered Calls:
When you own 100 shares of any company you can sell covered calls on your position and collect a payment called a premium simply for selling that option. This premium is paid to you by the person on the other side of the trade who is buying that option. Now it’s called covered calls because your position is covered by the 100 shares that you own. You are putting up the shares as collateral for this trade in case the trade goes against you and you are forced to sell your shares- You must have a collateral of 100 shares for each 1 option contract that you sell. So let’s say you own 100 shares of a stock and decide you want to sell a covered call on the stock. Here’s what’s going to happen step by step. You pick a strike price and expiration date for the option that you want to sell. The strike price must be higher than the current price of the stock. This is called selling Out-Of-The-Money Calls.
Company X is trading at $50 right now. I decide I am going to sell covered calls on my position so the first thing I have to do is choose a strike price I don’t think the stock will reach by a certain date. Let’s say by next month I don’t think company X will reach $55 which would be a 10% increase for the stock. So I pick to sell an option with a strike price of $55 and an expiration date of 1 month out. Once I sell this option a few things will happen. First the brokerage will put aside the 100 shares that I own as collateral for the trade. These are still my shares but I just can’t do anything with them before I exit out of my options trade. Secondly, I will get paid a premium for selling this option paid to me by the option buyer. Now this premium is put into my account right away. In this case lets say the premium is $2. I will get paid $200 because remember 1 option contract controls 100 shares so we multiply the premium by 100 for each contract - so boom I get paid $200 into my trading account.
Now at this point 1 of 3 things can happen with the trade.
Scenario #1 - the stock price does not reach the strike price by expiration. (That’s good)
Scenario #2 - the stock price reaches and exceeds the strike price by expiration (That’s bad)
Scenario #3 - You decided to close your position before expiration by buying back the contract and closing the trade.
Can you lose money selling covered calls? if you own stock and already are in the profit on your stock position then you CANNOT lose money selling covered calls and waiting until expiration. The worst thing that will happen is you’ll lose your shares - not lose them but be forced to sell them at the strike price. You might feel like you lost money if your stock shoots up way past the strike price - and you are forced to sell at a lower price - but you only lost the chance to make that extra profit. Remember, you should always sell calls at strike prices above where you bought the stock because then you’ll always be in the profit and whether or not your shares get called away you’d still make money
Do you get to keep the premium if your shares get called away? Yes - the premium gets deposited into your trading account right away and is yours to keep because you did not have to buy the option back. The option will be exercised and you’ll lose your shares but get to keep the premium.
What happens with my collateral - so when you put up collateral you can’t do anything with the shares until the option position is closed. The shares will be released back to you the day after the option expires or right away if you close your position early. Once you have your collateral back you can go ahead and sell another call using the same collateral for the next week or the next month.
Will I have to pay taxes on the premium I collect? Yes, simple answer - just like any trade, if you make a profit you will be subject to the all mighty short term capital gains tax so you’ll definitely want to keep that in mind and plan for that.
I am not a financial advisor - none of the above video is meant to be taken as investment advice. I am just showcasing MY own strategy and my investments should not be tried and duplicated based solely off the information in this video for risk of losing money.

[@AdamLevine759]

Been beating myself up a bit that I sold my 53 shares of NVDA at $303 each back in May 2023. Now thinking of liquidating a few other investments to rebuy but afraid to do so. I also currently have $100k in savings making me next to nothing.

[@ValeriePheasant]

Everyone needs a Margin of Safety in their portfolios and just remember, It's time in the market versus timing the market.

[@KeanuReevesf]

Try slowly diversifying your investments over time tends to yield better returns than doing it in a single instance, buy and hold. buy 10% then when in profit add more, or just buy on a dip and hold. nvda is not going down soon

[@Sylvesterhunter870]

De-risk your portfolios, shore up your core holdings, and take some profits while balancing your portfolio allocations. I’d also suggest you go with a managed portfolio, so it’s best you reach out to a proper fiduciary to guide you, that’s what works for me. We've made over 50% capital growth minus dividends.

[@NicoleAniston-o]

Great gains there! mind sharing details of your advisor please?

[@Sylvesterhunter870]

"Melissa Elise Robinson" is the licensed advisor I use. Just research the name. You’d find necessary details to work with to set up an appointment

[@bypiL]

As a beginner, I watched so many videos about buying/selling options and this is by far the best explanation ive ever seen. Im still confused at times but im gonna keep watchibg your videos to understand it more. Thanks.

[@jonmiller8372]

You and me too like I get it!!!! But then I'm like stratching me head at another part of it....BUT WE GOT THIS!!!!!

[@Errordemn6]

Check out Tyrone Jackson's videos on covered calls. Pretty simple as well. I also think this video is really good too

[@dsf5956]

I agree…. this is very good! Thank you!

[@reelhawksstudio]

Should probably mention that in scenario #2 you sell your shares at profit and still collect the premium so it's not exactly a loss. I don't like closing a trade before expiration unless the stock goes out of control. Pick a strike price at which you don't mind selling your shares for profit, then sell PUT and collect some premium to try and buy those shares back at a strike price that is less than you sold. Rinse and repeat. The wheel strategy is great.

[@PandreaMoney]

Thanks so much! Yupp, I go over all that in the video. I plan on doing a video on the wheel sometime in the near future :)

[@hughmumgusslung]

What should be put level

[@ZackFoster3829]

Covered Calls are great for decreasing cost basis, especially when paired with Cash Secured Puts. Great introductory strategy for beginners!

[@PandreaMoney]

Thanks Zack, that's right - so much possibility! thanks for watching :)

[@odysseatrakada6573]

@@PandreaMoney could you please make a video about pairing with cash secured put !!!

[@galiciadabest]

Just search the wheel strategy for stocks. It just means to sell puts until assigned then turn around and sell calls after

[@ZackFoster3829]

Yep, it’s known as the Wheel Strategy. If you have some time, search a few articles or KZbin Videos. Maybe you can get a little bit of insight before Alex makes a video about, assuming he decides to.

[@dfraney4327]

You are an excellent teacher. You make options much easier to understand--step by step. Love your sincerity and your humor! Thank you so much!

[@hammadmazharrana]

Suggestion: include visualizations, ppt in your video. It’ll help in understanding the concept even better. Your content and the way you articulate is great

[@heather-perry]

Your videos have broken down the option process so well, I’ve started selling covered calls and cash secured puts this month and was just wondering how to close a position, and woke up to this video. Thank you!

[@supreme5580]

Lucky you that you can afford 100 shares. I'll be doing that when I'm 49...

[@jamesbon1]

Without a doubt, one of the BEST instructional videos on Covered Calls and especially on buying it back. Until now I've been sitting there hopelessly watching my stock increase beyond the strike price until it gets exercised. Now I know I could buy it back, at a price, still make the profit of the difference from the initial premium and sell it again for more premium. Thank you Alex.

[@mendeleyborisov92]

I remember having a consultation with a financial analyst last August, and it was incredibly insightful. Can’t stress enough how helpful experts in this field are!

[@Sammytammy192]

Absolutely agree! A good financial analyst can make a world of difference. What specific insights did you gain?

[@mendeleyborisov92]

Having Jonas Herman as my trade analyst, he has guided me to identify key market trends, pinpointed strategic entry points, and provided risk assessments, ensuring my trades decisions align with market dynamics for optimal returns.

[@Rubyruby287]

That’s awesome! I’ve been contemplating hiring one since I can’t get a hang of trading even after buying courses. I’d like a discussion with him. Any means to reach him?

[@mendeleyborisov92]

Hermanw jonas (a Gma!L comm Is he taking commissions for his services? Yes, I’m I still making money in the process? Hell yes!

[@Allambeecairns]

I started working with Jonas back in June, and my financial goals have never been clearer. It’s like having a strategic partner for your money with a solid track record.

[@annettedimuro4644]

Alex, where did you go? You really simplify things for us so that everyone can understand. Please don't abandon us now. I love your videos!

[@emanueltosado4818]

Exactly!! I just found this channel and its great!!!

[@walfytaffy3108]

I think he just became a father. He may not have a lot of time to keep up with his YT channel 😢

[@Hazel66781]

Excellent video! Visualizing you buying back the shares made it very clear how to do it. Thank you!

[@BradFinn]

*Good stuff bud! Killed it with this one!*

[@agathacolleen]

I lost over $80k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Charlotte Miller.

[@TaggeGust]

She is my family's personal broker and also a personal broker in many families I'm United States, she's a licensed broker and a FINRA AGENT in United states

[@ReuletRikki]

The very first time we tried, we invested $1000 and after a week, we received $5500. That really helped us a lot to pay up our bills.

[@ForwardMozell]

Their ...services are very genius and experienced in the market for over a decade and counting, they changed my life from a poor plumber to a better and middle class family man with 2kids.

[@JohnKenneth-f7w]

I'm new at this, please how can I reach her?

[@sakuracriticacorreooficial6907]

I just withdrew my profits a week ago, To be honest it was an amazing feeling when the profits hits my wallet I wish I could reinvest but, too much bills

[@thecheckmatetrader]

I LOVE THAT YOU HAVE STARTED ADDING VISUALS TO THE VIDEOS! - keep it up Pandrea I love these videos - learning a lot :)

[@ulisese6274]

Ive been searching for this video for some time now... I bought so many other videos and KZbinrs explaining this and I may be only understood bits and pieces.... This is someone who knows it well enough to teach. I've always been told if you can't explain something easy enough to someone you don't know it well enough. Thank you for your video

[@vdubluv222]

I've been wanting to jump in for so long. all of these " options for beginners" videos I've been watching for about a year... SMH.... Finally I found your videos!!! Please let me just thank you from the bottom of my heart. for some reason this video just removed all fear ( within reason ) and I'm currently paused @ 13:51... just bought 100 shares and sold a call for the 16th of next month.. I FINALLY PULLED THE TRIGGER! i can't wait to get a couple little trials out of the way and hopefully be able to one day get out of the office and work from home just trading!

[@willgordon5737]

Five months from now I won't be able to understand shit what pandrea is saying in this video, I'm glad and proud of myself that i made a lot of progress in the world of options.. i understand everything in this video! I'm glad and happy and ready to make some money!! Thanks pandrea!!!

[@Jessicatorres_768]

Building wealth involves developing good habits like regularly putting money away in intervals for solid investments. Instead of trying to predict and prognosticate the stability of the market and precisely when the change is going to happen, a better strategy is simply having a portfolio that’s well prepared for any eventually, that’s how some folks' been averaging 150K every 7week these past 4months according to Bloomberg.

[@alicebenard5713]

That’s crazy, I’m just doing everything wrong with my portfolio.

[@brittanynicolette9473]

The US-Stock Mrkt had been on it’s longest bull-run in history, so the mass hysteria and panic is relatable considering we’re not accustomed to such troubled mrkts, but there are avenues lurking around if you know where to look. My wife and I are retiring this year with over $7,000,000 in tax deferred investments. up until 3 years ago we were 100% in the S&P. During bear markets we had a perfect plan. We got an investment manager in our corner and didn’t look at our portfolio for nearly a year.

[@SophiaBint-wj8wn]

Same here, 75% of my portfolio is in the red and I really don’t know how long I can stomach the losses. I’m beginning to reach a breaking point.

[@blessingpaul5484]

Patience patience patience. It's a cycle.... a sucky point in the cycle, but a cycle nonetheless.

[@KatherineAnderson-lm8bw]

Wow, that’s stirring! Do you mind connecting me to your advisor please. I desperately need one to diversified my portfolio.

[@G-flo]

Great breakdown dude. Do LEAPS together with PMCC next =) Would also love to hear your take on taxes on unrealized gains, as well as tips when trading options with earnings or ex-dividend dates in play. Would also love to see you do tutorials on some basic charting analysis. No pressure, haha!

[@PandreaMoney]

Thanks so much! Yupp all that is on the list - wish I had time to do film all at once haha.

[@Chris96528]

Since you started your channel, I've watched your videos and I have been doing cover calls now for about 2 months. I have collected and won the premium thanks to your teachings. Thank you for what you do sir.

[@sunflower-bean]

This is the best video explaining covered calls so far! It's easy, straightforward, and provides a live example. Thank you!

[@pramodgaikwad5500]

Alex, I never comment on trading-related videos because, frankly speaking, I do not understand them completely. It's the first time I have glued to your videos, 4th in succession in the last 2 hours (even writing my notes), and it's the first time, I can understand the concept and strategy both. Thank you so much. You are amazing.

[@israelmusamohamed1185]

I have some experience in options trading and I like how you are not exaggerating expectations ! You’re keeping it real and that’s a lost art now and days . I am going to continue to watch your videos and others should too thanks. 🙏

[@VetteZilla]

one of the best videos on how to sell covered call options! 🔥 keep up the good work!

[@PandreaMoney]

that was my goal! thanks so much!

[@jiujitsuway4life]

Great video

[@AgWhatsUp]

This is great information and everything, but for those who are just starting out with a small portfolio, a lot of companies with stocks that are on the cheaper end, most options have a premium of $0.01, with the contracts that actually have a decent premium being extremely risky strike prices. Would you consider making a video with some company recommendations to start out with for those starting out with smaller portfolios?

[@PandreaMoney]

Hi Archie - hmm, it really depends on the stock and the IV and time to expiration. For the ones you see with $0.01 you are looking at the closest expiration date and pretty far out-of-the-money. You also should look at the volume on that stock - maybe nobody is buyings/selling options in it. I have added your video request to my list :)

[@1Damstar]

These are okay as a training too..

[@nvass99]

You may not like this answer, but this strategy is not for people with small portfolios. You need 10k+

[@jacobgreenberg5684]

Hey Alex, you have very helpful videos! I’m pretty new at this. I’ve been focusing on finding options with >80% profit and maximum premium, and choosing stocks under $5 to trade since I have a small portfolio. And I’m choosing 1 week to a month out for expiration. The problem is, I’ve been finding these great sells w/ high premiums and high chance of profit, but all my orders have gotten cancelled by the end of the day. Any insight on what’s happening would be really grateful!

[@nvass99]

@@jacobgreenberg5684 Crappy stocks have low liquidity, which means there isn’t much interest in people buying the options that you are selling. Don’t sell options until you can do it with real companies/ETFs

[@HVSSVN-u1d]

hey alex, i love how you incorporated a live example of the topic. Please do that more often and also, I would love to see some videos about buying calls/puts live. Thanks.

[@lalac9057]

Thank you. You have the best videos on teaching options!

[@VersaceJMG]

Love your content bro, I really like the live trade demonstration!

[@PandreaMoney]

Thank you Juan! I will do more of those then! :)

[@anthonyandrews7858]

Thank you! This video showed me exactly how to sell covered calls I really appreciate it. I’d been looking for a long time to find how to exactly do this

[@AllThingsFinance]

Great video, I love this type of easy to understand content. Especially when it comes to options and covered calls! Keep it up!

[@filizbali1032]

Thank you for teaching options. I did not know anything about option trading at all. I started reading and watching videos on KZbin. Until I found your channel I was lost. I guess I am a bit visual learner. You are the best of all of them. I mean it. You know how you say tick the like button, if I could I would hit it million times. Thats how helpful your videos. You seemed to stopped making videos over a year ago. I wish you start making videos again. Please come back. Best wishes.

[@TheDaximus]

Appreciate the break down and the live example to close position🤙🏾

[@PandreaMoney]

I appreciate you watching my friend!

[@chizer198]

Thank you for this video. If possible since this is now 2 years old (I come back to it often because it is so well done in explaining options) I'd love to see an updated version of this video on how to trade on Robinhood. Great content!

[@brucedavid7231]

Been binging Robinhood options videos for several days. This was by far the best example.. Thank you.

[@elvonneypoole8653]

Nicely done!! thank you for a example I can actually follow.

[@jerryraymondlacson9761]

Hi Alex , this is one of the most informative options videos that i have seen . Thank You ! My question is this : i have a number of shares that i've bought before the pandemic and had not been able to dispose or let go as my position previously was to go long . Now , the value of the shares had drastically deteriorated because of the pandemic. In your video you said we should sell covered calls when we are making a profit off our collateral shares , mine on the other hand had been on the negative ... but i can still pick a strike price which i think the stocks will not hit within the expiration date that i may choose. Is that a safe trade and can i go ahead and do that so i can make money off my stocks that are negative while i wait for the recovery ? Hoping for a reply . Thx.

[@itzchi]

@Pandrea, thanks for the great video. This is the most simple and to the point explanation of options I found on KZbin! Quick question - When the options expire and the stock price is above the strike price, Robinhood will automatically transfer my 100 shares to the seller I guess. But does Robinhood automatically transfer the money to my account? I should see $ 100* strike price in my account..right? Thanks in advance :)

[@bobbynojoke76]

this was very well explained…i havent sold options yet but im beginning to understand how it all works and i am building up my shares,i plan to start soon,i just want to learn as much as i can first,and this video was great. ill check your other vids. thanks man!

[@Therealmialockhart]

Thank you 🙏🏾. You made it crystal clear.

[@martinez319c]

So to get this right i have to purchase 100 shares of a certain stock to have collateral example apples worth $200 per share i would have to have bought $20000(100 shares)of apple for me to have as collateral?

[@martinez319c]

Answer?

[@stevenkurt32gmailcom]

Hello I live here in California, I'm just using this means urge you seeing this to give a try and appreciate me later. I saw your comment and I decided to put this down to let you know about him, He guides me with the exact time frame to trade which I made about $5k after trading alone and I recovered my losses. His strategy is really good i'll highly recommend him to you...

[@stevenkurt32gmailcom]

Steven Kurt 32 at gmail .

[@scottreesetradinginvesting7936]

Yes you are correct. Obviously, $20k is a lot of money, but you can also reduce this amount significantly by trading on margin. However, there are added risks when doing this, so be careful.

[@ichoudhury007]

Excellent tutorial. I love how complete this video, covering the end to end process. Very well done, thank you. I have been unlucky few times selling covered call against some of my favorite stocks that shot up just as I entered into the agreement (but before that, it was moving sideways, DOH). But of course I could always buyback but hurt my ego of losing out that cost basis I used to brag about and of course the stock shotup higher. 😅😆

[@ichoudhury007]

Not much, how about you?

[@datboinate0192]

When you made the trade and broke down what the -52 meant now I got it You got the best covered call video on KZbin that’s what I was waiting

[@yhoff76]

"Buy back the contract"??? Man you just pistol whipped me with that one!! Nice Pandrea, keep the knowledge coming sir 😎

[@thesummerland6165]

Best explanations I’ve found of all KZbinrs, ty so much

[@sethswifty]

Mr. Pandrea: i just learned selling options for premium about 3 months ago. while i learned via 3 minute talk with my son, i realized after doing it there is more to it. That said, when selling covered calls, why doesn't anyone talk about when to and not to close a covered call when the stock tanks faster then expected. If the stock starts going down too fast and get past your breakeven, whats the best 'options' :/ at that point. ive just watched your covered call and your 101 to options and i look forward to more advanced learning and better understand IV. I sure would love to talk to you,i wonder if and how that is possible. thank you for your work, sincerely. sas

[@scottreesetradinginvesting7936]

Very few people talk about it because that doesn't get views :) If all you talk about is how easy and simple and passive option selling is, then people will flock to your channel. But that is most certainly NOT how trading options is in reality. You are absolutely correct...there is considerable risk with selling covered calls because the stock could plummet drastically. So unless you don't want to hold the stock for the very long-term (in which case you don't care about short-term drops), then I would suggest having a stop loss in place.

[@supreme5580]

Very informative and optimistic to watch. I'd love a video on buying short term puts. You kind of touch on the other side of the trading mirror with this analysis I guess. Thanks for explaining the bids and asks, next up please cover open interest/high liquidity how important it is, if it at all, I'd love to see a breakdown of that.

[@stevenkurt32gmailcom]

Hello I live here in California, I'm just using this means urge you seeing this to give a try and appreciate me later. I saw your comment and I decided to put this down to let you know about him, He guides me with the exact time frame to trade which I made about $5k after trading alone and I recovered my losses. His strategy is really good i'll highly recommend him to you...

[@mlperfectbalance]

Hi Alex, I purchased my first covered calls today🥳 Thank you for your video, I made a mistake at the beginning, but then I went back and followed the step you showed to buy back the contract! YEAH!!! I am so exited, Thank you. I hope your income and followers multiply 1 Million times :) Next. I will buy a spread call, if you can make a video on that, that will be fantabulous ! Thanks again, you rock.

[@lvadvent]

Thank you for laying that out so clearly!

[@babua8175]

very simple way to explain,appreciate your content.

[@ndwolfwood09]

Thanks Alex! I found so much value in this video and am more confident in Selling Options! Also FYI to always save your profits before tax season - CA 6% + FED 22% capital gain tax.

[@amstaylorph]

Great clarity. Thank you.

[@poke-dratini2893]

Thanks for the video. I'm not understand the part that Robinhood showed unlimited loss on screen?

[@scottreesetradinginvesting7936]

You don't actually have unlimited loss potential when selling covered calls. But you still could lose a substantial amount of money in the worst case. For example, if the company goes bankrupt and the stock plummets to $0, you'll lose thousands of dollars.

[@JenJame]

Thank you! I appreciate your free music as well AND your guide!

[@darioteodori4811]

Hi alex. Thanks for the videos learning a lot. The part that i am not understanding is scenario number 2. You entered a contract and the strike stock price is higher than the current and its reached before expiration. You end up selling the stocks at a higher price than you paid for in the first place plus keeping the premium. I must have misunderstood.

[@NB-gp8ml]

Such a great teacher, Alex! Just found your videos and impressed by your passion to teach whatever you can with so much determination!! You really care and it shows!! Thank you for your hard work! This stuff is confusing but I’m sure with more understanding it will sink in more. Again, thanks!! 👍🎉

[@RealMrJamil]

I’ve been doing covered call with Apple, Sofi & Bank of America. Hopefully, I’ll quit my full time Job within few years & become a full Time Option Trader 😎. I started an online business & trying to learn more about that too. My goal is to become financially freedom as soon as possible 😎

[@PandreaMoney]

That's amazing! Good luck my friend - keep learning and training - you will get there!

[@Keto_Mike]

Thanks for the great content, your a great teacher. I've been watching videos on options for weeks now and you explain it the best. Thanks!

[@yoshisato515]

Thanks for another great content. I started trading covered calls thanks to you. It is a great way to generate extra income passively. I can't wait for more options strategies you can share in the future!

[@larrythecoderguy9560]

not sure which is better, your teaching skills or your entertainment. nice to have both.

[@ktang1286]

Alex, your videos are awesome. I’ve been looking for simple explanations of how options work and had yet to find one until I stumbled on yours. Thank you, sir!

[@martinkrins3915]

Uncle Henry has great and easy explanation as well

[@isaiahmorales5434]

Can you make a video where you show how to profit or passive Income from buying options? Or show how you would go about doing it if you were to do it. I love your videos but don't want to sell options as I don't have alot of money to be buying a hundred shares to be doing these covered calls and then lose them. I have made a couple thousand on buying options but that wasn't to say I lost money along the way as well (I lost 800 in a day) I just want to avoid making mistakes like that because to be honest I don't have a strategy I just buy what I can afford and hope for the best. Any advice would help Thanks and keep up the great work!!!!

[@scottreesetradinginvesting7936]

There is no way to generate passive income when buying options. Time decay will always be working against your positions, slowly eating away at their value and generating losses. You need to be on the selling side of options for time decay to work in your favor.

[@icecoldr7226]

Great video. Just started today I’m pumped.

[@MarcusCervantes]

Watching this video for the third time and I finally understand. I've started with paper trading on TOS and am looking forward to the day I can start selling calls on a live account!

[@scottreesetradinginvesting7936]

Paper trading first is a very smart move, especially in this current market! Best of luck to you, Marcus :)

[@FinancialSelfReliance]

Is the % chance the same as delta?

[@cfarrelly1732]

Hi Dr. Pandrea, Is there day of the week that is best for selling options? Also, in a future video can you talk about 21 and 45 days to expiration (DTE)???

[@scottreesetradinginvesting7936]

No difference in selling options on any day of the week. But it generally is better to sell options when implied volatility is elevated across the market...which usually occurs during a selloff. Higher implied volatility means higher option prices.

[@vrajshah2156]

Hey I love the videos, I just had a question about selling covered calls, when you pull up the order form, it says there’s a bid and an ask, you didn’t really go over what those were in the real time example but the ask always seems to be over the bid. When selling the contract, can you put the ask price in first instead of the bid? Why’d you put the bid price when selling it and the ask price when buying it? Can you choose to put the ask price in when selling it since it’s always higher?

[@scottreesetradinginvesting7936]

The Bid price is the highest price someone in the market is currently willing to pay for the option. And the Ask price is the lowest price someone is willing to sell the option. Generally, you should place an order with a Limit price that is right between the Bid and Ask. In most cases, someone will be willing to meet you halfway. If not, then slowly change your Limit price to get closer to either the Bid or Ask (depending on if you are buying or selling). Selling right at the Bid or buying right at the Ask is not a good idea because you are literally giving away a few extra dollars by doing so.

[@traderstatusquo]

Great explanation.

[@picklerpickler8785]

This video has really really helped me as far as closing sell call. Thanks so much!

[@infamouschimken6084]

Can I let my sell/call or sell/put expire whether if its In the money or out of the money?

[@scottreesetradinginvesting7936]

No reason why you can't do this, but it can be dangerous to hold short contracts through expiration if assignment is NOT part of the plan. I have a video that takes a deep dive into this topic if you're interested... kzbin.info/www/bejne/eJetZWpsdrV-oKM

[@Pauliy1]

Day trading gives me great returns weekly and anyone can take advantage too but there are restrictions that could limit one from achieving this so I use an expert while I earn thanks to the AI technology on the platform

[@Ahmad-b9q5x]

Great, but how is done? I will like to know how to begin also

[@olivia4182]

I have done very well by trading Stock options as well as using simple covered calls and married puts.

[@Lilyoregon]

Many people have become millionaires trading because with the leverage invovled in trading, people can make a fortune or lose it all very quickly so you need care

[@Pauliy1]

@@Ahmad-b9q5x I don't trade myself as I mentioned earlier I use an expert for that Mr ravies Benjamin which is why I earn because of his outstanding strategies

[@Ahmad-b9q5x]

@@Pauliy1 please can I have a way to connect him

[@nickynicky5265]

The best Teacher on earth.Thankssss .

[@arkadijxy]

How to trade like this from europe

[@davidhowes4572]

Great description! I appreciate it

[@miguel18815]

What if the option price increases, you didn’t mention that?

[@scottreesetradinginvesting7936]

Naturally, the call price will increase as the stock price rises. You will therefore see losses on the Call option for sometime during the trade. But the total P/L of the entire covered call (long stock + short call) should be positive.

[@ultimate_bound9496]

What a will explained video I swear you can teach a lot better then any other KZbinrs

[@PandreaMoney]

Thanks so much! I spend a lot of time planning and making sure the video is structured properly. Guess its working :)

[@Californification]

Nicely explained. Thank you.

[@chantelsanders1972]

This was great. Thank you so much. I plan to attempt my first selling pf a covered call when the market opens In a few hours. I've watched tons of videos on this and this was the first one that not only made sense but walked us through an example as well.

[@granthershbine9385]

What do you suggest buying 100 shares of with a smaller (around $3k) account?

[@scottreesetradinginvesting7936]

Nothing...save more money first before using covered calls. Even buying 100 shares of a $5 stock will cost $500...which is over 15% of your total capital. That's way too much risk for a single position. Ideally, you should not be allocating more than 5% of your capital for one trade.

[@Raviexact]

Great guidance, thank you 🙏

[@thomasmwangi8136]

Dude! we asked, you answered. You actually made a killer video showing exactly how, on the app, you get out of a open options position. BEST video yet. THANK YOU 🙏🙏🙏🙏🙏🙏🙏

[@PandreaMoney]

THANK YOU! haha yea I got so many comments on that and started planning the video right away :) I appreciate the kind words my friend

[@billybrown555]

If you buy back a covered call for a premium higher than what you originally made because it is in the money is that treated as a loss?

[@scottreesetradinginvesting7936]

Yes, but this will generally only happen if the stock price has increased as well. So you'll lose money on the Call but should make a lot more in profits from the long 100 shares of stock.

[@damianfoo2847]

hi pandrea If we max out holding the contract till expiry and the strike price is still above the current price do we get to keep the full premium ? as no action is required to purchase a call option to close the position.

[@scottreesetradinginvesting7936]

Yes, you are correct. As long as you hold the position to expiration, you actually keep the full premium no matter what...regardless of where the stock ends up.

[@1Damstar]

So glad you opened your channel, learning quite fast!

[@Ednyce81]

Great video been trying to understand options you broke it down perfect but how come you can't sell options on every stock ?

[@johnvak7390]

Thanks for explaining this so simply! I guess when i have more money I can do more purchases of shares and sell as calls

[@MoXplant]

@pandreafinance - I have been buying and selling stock for decades but had a long term bias against trading options (I know, I know)...Anyway about 6 months ago I decided to get educated and explore them. I have watched tons of videos across a lot of channels and I have been very selective with my subscriptions. You do an amazing job of quickly laying down what matters and a great mix of interest with education - happy to say yours is one of the channels I chose to subscribe to. Thanks for what you do, very appreciative.

[@Laroux52]

Such a great video of explaining this.. have watched SOOOO many and options are so confusing... You def clarified it.. thanks so much 💸💸

[@hagi2013]

You are gift from heaven, I spent tons of money just to understand concepts no one made this easy. Thank s giving back and I’ll pay forward :) to poor brother or sister like me.

[@JohnJohn-mh9cw]

So what is the benefit for the suckers as they have been painted to be on the other ends of these trades? Why do they pay premiums for losing percentage trades?

[@scottreesetradinginvesting7936]

Because those suckers are either uniformed or are trying to go for the home run trade lol

[@thedroneguyy]

So this might sound like a dumb question but I’m going to ask anyway. So should I not trade options unless I have 100 shares of atleast one or some stocks?

[@scottreesetradinginvesting7936]

For selling covered calls, yes. But there are plenty of other options trading strategies that do NOT require any stock position and use significantly less capital. Have a look at credit spreads, debit spreads, and iron condors!

[@yormanlopez8442]

God bless you!! You just changed my life!! I’ve been doing it for three months and I’ve made pretty good money selling option, thank you so much!

[@JCarlosWhite]

How do you create a limit sell order if the bid for the premium is zero?

[@scottreesetradinginvesting7936]

In most cases, someone will be willing to buy the contract for at most $0.01, but if not, you may just have to let the option expire worthless.

[@Andy_OvaSeas]

Loving the cool graphs during the examples....appeals to visual learners. Good stuff

[@PandreaMoney]

THANKS! They only take a few hours to make no biggie haha :)

[@Keto_Mike]

Dividend question so say you sell a put on a stock during a dividend pay out where does the dividend go?

[@sebastiendetoulouse]

Hey Alex, thanks a lot for your cool video!!! I have a question regarding scenario #2. What happens if the price exceed the strike price before the expiration date? you could be forced to sell your shares before the expiration date? Is this right?

[@PandreaMoney]

Hi my friend - technically yes that can happen but realistically it doesn't - the reason is that the buyer would just sell the contract further rather than exercise the shares because he would be losing money if he exercised. Think of it from your point of view when you buy options. Your contract is now in-the-money...well are you going to exercise your shares and lose the extrinsic value of the contract? Most likely not. I have never been forced to sell shares early. Hope that helps!

[@OscarFlores-db6jm]

Easy, understandable, best way to learn and teach great video!

[@Kittehsmahname101]

How do you go about choosing what company to sell calls from? Like, what do you look at to say ok I'll buy the 100+ shares from this company to sell covered calls from them?

[@scottreesetradinginvesting7936]

You need a logical rationale as to why you think the stock price will increase over time (since a covered call is a bullish strategy). And you should look for such stocks with high implied volatility (ideally above 40% to 50%). High implied volatility will make the prices of the options very expensive...and therefore worth selling.

[@Kittehsmahname101]

@@scottreesetradinginvesting7936 Very helpful, especially as I am just beginning to learn. Thanks!

[@scottreesetradinginvesting7936]

@@Kittehsmahname101 You're welcome! Best of luck to you :)

[@leafsrule02]

This is one of the best videos I’ve ever seen on explaining a difficult concept. Thank you! Question: I sold a call of a stock at 65, the stock is now 65.50. Why haven’t my shares been called away? Does the buyer have until the expiration date to call away my shares?

[@emmagriffin6569]

Can you use cash as collateral when selling calls? Or is that only with puts?

[@scottreesetradinginvesting7936]

Only with puts. To sell covered calls, you need to own 100 shares of stock.

[@joec9649]

It might be a stupid question but what if stock price is actually down from the price when I make a covered call?

[@scottreesetradinginvesting7936]

It absolutely matters where the stock price ends up. If the stock price plummets by expiration, you will still keep the full Call premium, but you'll be down on the overall position.

[@TheSelfemployedInvestor]

Does someone know if I sell IN THE MONEY covered calls, to collect higher premium, can the buyer execute the contract anytime? Forcing me to sell my shares at that low price, or has to wait until expiration?

[@scottreesetradinginvesting7936]

Yes, anytime you sell an option that is currently in the money, there is always a chance the buyer could exercise it early. However, this is extremely unlikely unless there is no extrinsic value remaining in the contract. I have a video that takes a deep dive into this topic if you're interested... kzbin.info/www/bejne/eYmcc2Cnha-gg68