hi do i need a margin account to sell covered calls thanks?

@@sko1beer nope you just need 100 shares of the stock

@@josh7314 thanks

Amen to that!

​@@sko1beeryes

in video, he sell 130$ share call option for just 2$ for a duration one month. How d hell you able to cover your shares cost by just 6 weeks? Any magic pills?

​@@thinhtrinhtuan6705maybe selling weekly and IV raises week after week and therefore premium too

@@thinhtrinhtuan6705I think OP meant they’ve been doing it for some time now and they will hit that goal within the next 6 weeks?

​@@thinhtrinhtuan6705he stupid

yes this will work as well!

@@smbcapital If you really expected it to go to 150 and you want to profit as much as possible from premium from that, the pro move would be to sell what shares you have, buy as many ATM or ITM calls as you can, and write calls against them. I suspect you'd do better with weeklies. But ofc all this depends on correctly predicting the future, so maybe a word about how to hedge a play like a covered call campaign would be good.

That’s what I do when my short goes itm. I rolled out and up. It’s like buying gains. like pay $30 on $100 gain so u make $70. I think Some ppl get emotional when their 100 shares take a dip. But in that scenario I can just keep collecting the premium but if possible just don’t go underwater. I’d just go further out on expirations as long as my strike is above my cost basis

​@@WendingWayfarer can you explain the break down of that? Are you buying calls and also selling them? Are you talking about debit spreads?

@@KosiRevaya I am talking about diagonals or pmccs. It's basically a leveraged covered call. Of course, if it drops below you're long strikes, you're screwed. But that's leverage for you I suppose.

prefect for the investor to earn some additional income

great to have you!

How beneficial was the course?

Yep I can relate to that. I have several stocks which I bought for the purposes of selling covered calls on and got burned. $NIO, $SKLZ, $PLTR... As far as NIO and PLTR I will wait untill these stocks get back to my purchase price (which I believe they both will0 and hopefully resume this strategy then.

I had the same question but just assumed they went with monthly calls to keep things simple.

@@Wanderlust073 I do not believe that weekly options are any more difficult than monthly options other than the possibility that you have to trade more often. In fact, most of my covered calls are done with weeklys unless the premium is too small. Then, I would go with the monthly. Also, if you are an active trader, you can usually negotiate very modest commissions. So, more frequent trading is not that much more expensive.

@@jamesduffy318 i trade cc’s every week as well, sometimes moving out and back in the same week. I meant simple as in a simple example for a video - ‘monthly income’.

@@jamesduffy318 Yes I do weekly and prefer them

I think the idea here is you want to own the stock in the long term and are using the covered calls to generate income while you wait for the stock to appreciate towards your target price

@@smbcapital Exactly. Thank you

In this case, an option, pardon the pun, could be sell the stock at your stop and monitor your covered call. If the stock doesn't recover for it to be exercised, great, the option expires worthless, if stock price approaches the strike or the price turns bullish, buy the covered call contracts back to prevent it being exercised. In this case the premium to buy back could possibly be less than the original premium received due to price decay. Btw, this is a hypothetical and I've never used this strategy but just a suggested possibility. Hope this helps.

@@MichaelSmith-vy2gp u can't do that; brokers won't let u have a naked short call with unlim risk to upside

@@smbcapital In last example at 13:09 we could see with covered calls from $130.11 to $151.45 per share price you profited $22,220. Lets say if you would just hold the stocks without doing anything (buy 1000 shares from 130.11 and hold them to 151.45) you could get $21,340 of profit. So I am wondering is this additional 880$ of profit with covered calls worth it? In my country you have to pay around 40% tax on short capital gains, so this would be around $500 of net profit. Options seems risky business because you are forced to trade 100 shares every time for minimal gains and you are exposed to downside like now when market is crashing.

you keep the premium so you still make money. And yes the value of the underlying stock goes down , unless you sell there is no loss.

Welcome!

Can you predict the future?

Uou have to view covered calls as a tool to reduce your cost basis on the trade. Lets say you buy 100 shares at a cost basis of $5.00 if you sell a $1.00 covered called once a month after 5 months your cost basis will be $0.00 on that position. Thus anything after that is pure profits so if you wanted you can at that time sell covered calls closer to the stock price.

This strategy sucks for that exact reason when the price goes down.

@@mrcmid9132 I run this strategy all the time and I suck the premium out on a regular basis regardless of what happens. It works beautifully. For example: one of my long term holds is the voo. I sell the 15ish delta 30 days out on the voo constantly and if it goes down so what i'm never selling it. But the short call premium is gravy and therefore I extract and spend it on hookers and cocaine. You can make serious money selling covered calls on things you already hold or know you're going to hold forever. I'm profitable over 100k ytd in 2023 just selling calls. I do it monthly with KO as well. Low volatility and easy money. On individual stocks I simply execute a covered stock purchase buying shares and selling atm calls simultaneously every 30 days. If I get stuck with the shares and they're down so what...the premium was profit. I only deal with dividend paying stocks, best of breed and ONLY stocks I would keep forever if necessary. It's not a loss until you sell it...and good companies always come back. 2022 prime example...I'm fully recovered.

No

You always get to keep the premium unless you decide to buy back the contract.

The one you made 17k on

If you have to ask this you are in the WRONG place.

What’s better? Stock drops and you collected a premium. Stock drops you didn’t collect a premium. Seems pretty obvious.

@@Wanderlust073 point is you don’t necessarily generate the returns depicted…you can in fact take a flat/lose money with this strategy (like anything else)

the strategy is geared more towards stocks that you are invested in. You don't care if the stocks value drops in the short term. This is a way to generate investment income while you wait for the stock to appreciate in the long run

@@smbcapital excellent thx for your response, sometimes I have that short term trading cap on too tight :-)

I run this strategy all the time and I suck the premium out on a regular basis regardless of what happens. It works beautifully. For example: one of my long term holds is the voo. I sell the 15ish delta 30 days out on the voo constantly and if it goes down so what i'm never selling it. But the short call premium is gravy and therefore I extract and spend it on hookers and cocaine. You can make serious money selling covered calls on things you already hold or know you're going to hold forever. I'm profitable over 100k ytd in 2023 just selling calls. I do it monthly with KO as well. Low volatility and easy money. On individual stocks I simply execute a covered stock purchase buying shares and selling atm calls simultaneously every 30 days. If I get stuck with the shares and they're down so what...the premium was profit. I only deal with dividend paying stocks, best of breed and ONLY stocks I would keep forever if necessary. It's not a loss until you sell it...and good companies always come back. 2022 prime example...I'm fully recovered.

You know your premium up front and you know the risk up front. You can just buy your way out of the stock at your BE by buying back the sold CC. Very low risk.

There is no free lunch.... Unless you have a crystal ball (that works) it is all tied up in RISK. If one is so sure the stock will rise, stay with it or risk it running away from you. Use a different one to sell calls.

If his explanation is too confusing you do not need to play in the options world. Buy broad index funds or etf's and leave it alone.

My point exactly 👍

Easy, buy more of the underlying stock to enable more contracts to be sold.

wrong. you still made the 2k premium. if you don't sell the stock and it recovers you're fine. this is why choosing the underlying is important. I only deal with dividend paying stocks (so if you're stuck holding it you're getting paid, best of breed and stocks I would hold forever no matter what. As long as you're buying good companies they will recover and it is not a loss until you sell it. You can also continue to sell calls against the shares the entire time you're waiting for it to recover.

cheap has nothing to do with the strategy. you can run this on anything. typically if a stock is going up regularly you want to take advantage of the gamma and momentum.

@@JNHEscapes that’s a good point 👍🏻👍🏻

I have that same question.

because you're taking advantage of the elevated call premiums for one (if the stock is moving higher regularly). Also, this video is on selling covered calls for income not selling cash secured puts for income. I do both nearly every day and sometimes I even run both on the same underlying at the same time. There are many reasons why, but it can get complicated. For example, I have a portfolio of several million. I have a margin account. If my cash balance is only 5k because I am fully invested then I cannot afford to buy 150k in walmart to sell covered calls when the premium is only 2k. Not worth the interest on margin. However, since I have such a large portfolio and a margin account my brokerage will allow me to sell cash secured puts against walmart and it not count against my cash balance. They will credit the premium, but not hold the 150k as collateral as they would in a normal cash account or one with a smaller balance. Well, they do, but it's complicated just know they allow it and it doesn't actually put me into margin - so it doesn't cost me anything. Therefore, selling cash secured puts makes sense if I'm low on cash. On the other hand, I get the dividend as well if I'm holding actual shares during a dividend cycle so if I have the cash I will sell calls against shares like in this video. Also, puts and calls can have different values and implied volatility based on certain criteria or variables that may be occurring in the world or with the underlying so that should be taken into consideration also. In other words, you might choose one over the other for many reasons that have nothing to do with the underlying. Trading options is not easy and I've been doing it for nearly 15 years. There is so much I still learn something every day. If you ever ask a question or think something is dumb or useless with options it's only because you cannot see or do not know the bigger picture. There is ALWAYS a reason and a strategy behind every move. My first options trade I ever made was selling a cash secured put and I thought they were so damn cool and easy that it had to be illegal. For years I literally thought any minute somebody would put an end to the entire platform. It's insane how much money you can truly make selling cs puts and selling covered calls. I honestly feel sorry for anybody who actually works for a living. I can take 150k right now, today, and buy 2500 shares of Coca-Cola and sell the sept 8 weekly exp of the 61 strike (below the current stock price) for $1.12 and clear $2575 in 27 days - for absolutely nothing and on a stock that is a slow mover and that I would hold forever no matter what. If it goes down who cares. I keep the $2575 and sell calls again next month! You just can't beat it...