Selling Covered Calls - OTM, ATM, or ITM? What strike price should I sell?

Рет қаралды 4,598

Күн бұрын

Пікірлер: 52

@PatrickHoodDaniel 4 ай бұрын

Just found your channel and I love the way you explain options. I am considering selling a call ITM, so this video was very helpful in understanding the concept. Thanks.

@wealthadventures 4 ай бұрын

Glad it was helpful! Any questions, just ask.

@shareitwillya763 4 ай бұрын

always enjoy your videos, Dave. for the last 1-2 years been doing well selling OTM covered calls, some are dividend stocks & some are not. I like the strategy you talked of late in the video where you sell an ITM covered call and how it's actually more conservative and bigger hedge. I haven't even thought of this, but will try some. thanks for your great balanced info!

@camai75 3 ай бұрын

Great video Dave. You got me into options a few years ago. I don’t have a huge portfolio , $400K, and only a few positions i can sell CC’s. I have been selling ITM CSP’s this year, made a few K on UBER. I up $8750 so far this year and will grow my cash position to make more next year . Learned how to sell Iron Condors from you as well. Keep the videos coming. FWIW, on positions I want to keep, I like to sell my CC’s at a 20 delta, roll up and down as necessary.

@wealthadventures 3 ай бұрын

Nice! Glad to hear it has helped.

@theworkinginvestor 4 ай бұрын

Thank for for covering this! 🙏

@wealthadventures 4 ай бұрын

My pleasure!

@johnmaxwell1356 4 ай бұрын

I like slightly OTM covered calls (usually about 5-10%). But it is still dependent on the underlying stock. I wouldn't sell many CC's on NVDIA simply because of the price volatility and the growth potential. I like slower moving, predictable stocks. And I like 1-2 weeks out...the price, usually, is more predictable and no one knows what the price of any stock will be at an extended date. Just my preferences.

@wealthadventures 4 ай бұрын

That works!

@steventaylor4279 4 ай бұрын

I’m interested in learning more about how you set up your ITM covered calls on Realty Income. Do you have a video on that? 14:16

@wealthadventures 4 ай бұрын

Here is a video on O but I didn't sell ITM: kzbin.info/www/bejne/nYWqk2OMbKiHm6c Here is one on STAG that is slightly ITM: kzbin.info/www/bejne/qWG5lpxpYtGqrpY And here is one with LTC that is ITM: kzbin.info/www/bejne/Y4m4Y2h6obVqd9E

@SaulTaboada 4 ай бұрын

New to your channel but learned so much from your videos. Thank you sir!

@wealthadventures 4 ай бұрын

Thanks!

@JohnsFishTales 4 ай бұрын

Glad to see your channel growing. It’s well deserved.

@wealthadventures 4 ай бұрын

Thanks!

@user-gy4up6cd5o 4 ай бұрын

I like to do stranggle. If it falls below, I get a position. If it spikes, I sold it. If neither, then that's good. Don't sell calls while empty hands, and always pick the srike price equal to your cost if you can. Don't do something like 1% above, you will get greedy, then you are doomed.

@Sdelgado0267 2 ай бұрын

Have you trade WBA? Walgreens?. Thank you for your content.

@wealthadventures 2 ай бұрын

I did own WBA (and CVS) but sold all my shares about a year ago. No plan to purchase at the moment.

@jamiesmchen 4 ай бұрын

Thank you for the easy to understand illustration and explanation. Have you explained about more complicated options trading pair like straddles, strangle and butterfly etc. I have not able to fully understand the use case of it and the steps needed to come out with such options pairs.

@wealthadventures 4 ай бұрын

Hi. Here is one on strangles and straddles: kzbin.info/www/bejne/rau5oK2DbtZ6a5Y Hope it helps.

@jamiesmchen 4 ай бұрын

Thank you again

@David-lp1mj 4 ай бұрын

Nice video. When do you do ITM covered calls vs cash secured puts? How do the premiums compare?

@wealthadventures 4 ай бұрын

They are close but I always run my numbers. With money market accounts still paying a decent amount, moving into a stock to sell a ITM CC is a trade off. I did many more of these types of trades when cash was not paying but I could collect a nice dividend from a stock. When interest rates go up, calls become more expensive. Makes sense... spend a little to buy a call and keep your cash making money while you control 100 shares versus buying 100 shares. I could write about this for hours! Lol. I guess the math is the deciding factor along with my market view.

@Ed-bj5eq 4 ай бұрын

Clear explanation, thanks. If you are willing to pay others to worry about options variables and like the OTM approach, would you say that buying ETFs such as DIVO, JEPI, JEPQ etc be more efficient in the long-term ? and, of course, if you are limited by money and can't access 100 shares of good stocks to trade then those ETFs are the best way to go ? I would guess penny stocks are not good for this strategy

@wealthadventures 4 ай бұрын

I think ETFs like DIVO, JEPI, and JEPQ are a good way to access this market and hedge a little. If you can afford to simply be long stock, I would primarily buy VOO and other solid inexpensive ETFs. I would not trade options on something because it is inexpensive to buy 100 shares. Good luck!

@andrewmyers3520 4 ай бұрын

Enjoyed the video as always. Can you make a video (or link me to one already made) on when you sell CC otm on an underlying that you want to keep LT and it goes on a hot run and now you’re going to get called away… would like to hear your breakdown on rolling, just buying back the cc at a loss and keeping shares, or even taking a chance on losing the shares, selling a put at the same strike or maybe lower, etc. I recently got called away on a CC stock I didn’t want to sell but I let it go. Turned around and sold a put at the same strike, hoping for a pullback to get assigned. So far it’s still far otm so I’ll probably just collect the premium. I’ll do it again but obviously the premium will shrink and eventually I’ll either have to up my strike or figure something else out.

@wealthadventures 4 ай бұрын

Sure! I can tackle that. Here is an old one that might give some info: kzbin.info/www/bejne/Y4fUZoZ3iqecjLc Or at least illustrate it happens to us all!

@andrewmyers3520 4 ай бұрын

@@wealthadventures thanks! Watched it just now. Good insight! This options educational journey sure is interesting

@marcalvarado1915 4 ай бұрын

I like playing with options but I don’t like all the variables you have to stay on top of to trade them on individual stocks. So I sell options on the triple leveraged indexes like UPRO, TNA and TQQQ. The regular indexes don’t have enough volatility to make the premiums interesting. I usually sell puts where I can make 1% and if they get assigned I turn around and sell calls at the money. I keep the cash to secure the puts in a money market paying 5% so I’m making money there plus the option premium. I should make 15-20% on my money this way but of course I would have made more just buying and holding the stock…

@wealthadventures 4 ай бұрын

Interesting. I have not looked at using options with those products.

@ericjohnson829 4 ай бұрын

@@wealthadventures Yes, with the semi's so hot many played calls on SOXL triple leveraged semiconductor etf. TNA leveraged etf since some thinking small caps are raring to have a moment in the sun with the rate cuts.

@jamiesmchen 4 ай бұрын

The cash to secure the sold put option is in the same brokerage account that could not get 5% of interest. Can I ask you which brokerage company do you use?

@marcalvarado1915 4 ай бұрын

@@jamiesmchenI use Schwab and keep my cash in SWVXX. I believe Schwab requires it to be in SWVXX for 30 days before they will let you use it to secure your puts. I have heard that Fidelity and Interactive Brokers do not require that but I have not used them and don’t know for sure.

@marcalvarado1915 4 ай бұрын

@@ericjohnson829I’ve sold puts on SOXL too but I’ve grown most comfortable with the broader indexes. At least as comfortable as you can be with triple leveraged indexes anyway…

@kurts6741 4 ай бұрын

If I'm going to sell options, I want to take some risk to make more money. Winning little trades is not worth it. I like to sell ITM calls expiring in 60 or more days on stocks that have had a recent big move up. My goal is to trade and hopefully buy the option back at a lower price sometime during the life of that option. I'm betting on the stock to be subject to some profit-taking. I also do the reverse. Selling OTM puts on stocks that have recently been beaten down. Believing there is a good chance the stock will go higher during the options time frame. The way the market is now both tactics have worked quite often. The more volatility the better.

@wealthadventures 4 ай бұрын

Sounds good Kurt!

@henrim9348 4 ай бұрын

Have you tried tracking options on leveraged ETFs such as TQQQ , UPRO?

@wealthadventures 4 ай бұрын

Not really. Not a fan of those products myself. Premiums may look glorious but so will the losses. I'd rather stick to products I love to buy and hold just in case.

@ericjohnson829 4 ай бұрын

Be interesting see how you are playing Nvidia earnings this time, cash secured puts across earnings again or covered calls since it's already recovered alot in the past week or two ?

@wealthadventures 4 ай бұрын

I have puts open from 106 to 85 and a call at 128 out toward the end of the year. Still have some shares that are uncovered as well. I'm expecting a good report again next week.

@starr8111 4 ай бұрын

1:50

@jonathank7667 4 ай бұрын

Not tax advice, but there are tax consequences you didn't mention for selling ITM options vs 30+day OTM/ATM options. Look it up ;)

@wealthadventures 4 ай бұрын

True and a good point. They don't make it easy. I will try to get those rules summarized the next go around.

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