Becoming a good trader takes time and patience. When i first got into trading i was liquidated twice, and lost my entire mortgage deposit. I could have given up, but decided to learn how to trade and put it into practice. 4 years later and i am glad i made that decision.
I agree, that's the more reason I prefer my day to day invt decisions being guided by a invt-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using a invt-coach for over 2years+ and I've netted over 1.5million
I've been thinking of going that route, been holding on to a bunch of stocks that keeps tanking and I don't know if to keep holding or just dump them, think you inv-coach could guide me with portfolio-restructuring
‘Grace Adams Cook’ is the licensed advisor I use. Just research the name, you’d find necessary details to work with a correspondence to set up an appointment.
Great video. I watch several youtube videos on how to trade in the market but haven't made any headstart because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands.
The most important thing that should be on everyone mind currently should be to invest in different sources of income that doesn't depend on the government. Especially with the current economic crisis around the word. This is still a good time to invest in various stocks, Gold, silver and digital currencies.If your financial understanding is lacking, see a financial consultant.
Money advice is subjective, what works for you may not work for someone else, but it's always better to plan. I'm quite lucky exposed to personal finance at an early age, started job 19, bought first home 28, got laid-off work 36 amid covid-outbreak, and at once I consulted an advisor to handle growing my finance. As of today, I'm only 25% short of my $1m goal after subsequent investments.
I've worked in real estate for over 25 years and have neglected a major stock portfolio, however I need a different plan now... mind if I look up the professional guiding you please?
My CFA, Judith B. Richards, is a renowned figure in her field. I recommend researching her name online; you’ll find all her credentials and everything you need to work with a reliable professional. With many years of experience, she is a valuable resource for anyone looking to navigate the financial market. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Thank you for saving me hours of back and forth investigation into the markets. found her web instantly. After reviewing her credentials and conducting due diligence, i reached out to her.
To achieve a secure retirement, aiming to save at least 15% of your income in a 401(k) is advisable. Online tools can assist in calculating the best savings strategy for you, considering factors like age and income. Consistently saving this percentage can help build your retirement fund effectively, thanks to the benefits of compound interest.
Tell me about it. My 401k? Practically useless right now. I’ve got over $500k in there, but with everything going on, I’m wondering if I should just cash out and figure something else out. I’m getting closer to retirement, and the idea of relying on that fund is stressing me out.
Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out. I currently have 75% SCHD and 25% ROTH IRA. Brokerage account is 40% VOO, 35% SCHD, 25% XLK. Combine balance ~$3.3m Less than 3 years until retirement.... I have about 400k in cash. My portfolio has yielded far more than I expected for my retirement. Kudos to my advisor.
@@TungsClementes Well it seems like a lot of your interest is riding on your source, I could really get well accustomed to your viewpoint, get me involved.
That's quite remarkable! I'm genuinely interested in benefiting from the guidance of such experienced advisors, especially considering the current state of my struggling portfolio. May I know the names of the advisors who has been assisting you in navigating these financial challenges?
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with *MONICA AYAKO VOS* for about five years now, and her performance has been consistently impressive.
Selling a $TSLA covered call option with a 59 Delta is asking for it to be called away. Takeaway? -Select a lower Delta or select a strike price where you realistically foresee a legitimate resistance. Don't be tempted by high premium. Especially when $TSLA is turning and burning BULLISH. Good lesson. Thanks.
My second comment is again about the 2nd method. When the FNV is at $147, it would be safer to sell the March calls a little further out, maybe at 160 or 170 even, instead of 150. This would've prevented the loss when it hit 154 strike at expiration. Also, the loss of the in the money expiration was missing in the calcs at 16:38 minutes, resulting much less gain. Also, this example was very idealistic. If the stock goes to $110, what would happen to the $29k we invested in calls vs the profit we gain from selling out of money calls? I think a study on a strategy should cover all senarios, or not be presented as a profitable one. Otherwise, we could just buy naked calls, invest only few hundred bucks and present a big profit since the stock rallied in our favor. Not trying to be negative but learn and be more realistic.
Same question I had, what if FNV tanked and stayed down until expiration of the calls bought. Knowing how to deal with that scenario would also be helpful.
You are right. I agree with you. Sure it takes less leverage to buy the CALLS, but there's an expy date which means that the stock has to perform in that time frame. The clock is always ticking on those lottery ticket CALLS that you buy. That's the problem with the poor man's synthetic COVERED CALL. On the other hand, If you own the stock outright, then there is no expy date. You can hold the stock as long as you like until the rebound happens (assuming it's a good company). Also, on your first point. Sure he left money on the table. IE He limited his upside to $150 share price, but that was his original thesis resistance level. His resistance was $150, and he was right. It did hit $150 and still made money. If he owned the stock outright with no options, he would have sold it for $150 anyways unless there was a big 'gap up' before the market opened. Thank you for your contribution to this discussion.
I think investors should always put their cash to work, especially In 2025, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks against next year. Hope to make millions in 2025
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
Agreed. I've gotten hit with pretty substantial floating losses from market downturns -- several times over the last year or two. It's knocked me down below PDT and I've been stuck, unable to trade because of it...all because I didn't have the appropriate safeguards in place. I've always heard covered calls referred to as relatively safe -- I'd like to learn how to handle this scenario.
@@elroyblackbean Good question. My take on Covered Calls is that it's a way to skim a little extra income from the stocks you hold for longer term investment (not trading). A good rule of thumb is to sell 15 Delta. You are not going to get a ton of premium, but the main objective is to hold the stock until it hits an intrinsic value where you want to sell it. In the interim tho, I pick up some extra income while watching the stock go up to my intrinsic value target. Also, since I do this for long term holding stocks, I am not overly concerned about the temporary ups and downs of the market. I do this only on very financially solid companies (stocks) that I want to own for a long term. If you are losing your ass on the actual stock price of the stock, then look for more financially sound companies to sell Covered Calls on (AAPL, AMZN, MSFT, GOOGL or ETFs like SPY or VOO or QQQ). I don't look at selling Covered Calls really as a "trade" move. It's just a means to pick up a few extra bucks in premium while I enjoy the longer journey of watching my mega stock appreciate in value. There is a danger too that with some of these stocks, they are considered "growth" so it's feaible that they could rise so fast as to blow through your short strike on you Covered Call. I watch mine daily, and don't heistate to roll them UP AND OUT if the short strike is being tested....assuming I want to continue holding my stock by preventing it from being called away. You can also use technical analysis and sell Covered Calls only when they are at a clearly defined Support. No guarantees that it won't keep going up, but at least you are dealing with probability. btw.. this is why i use 15 Delta. It's a pretty conservative Delta to choose a strike that most likely wont be tested. Don't expect to get rich off the premium on these 15 Delta option contracts, but in the long run you will pick up some xtra cash along the way. As always, there's more that one way to skin a cat, so do what you feel is best for you.
One more point. Leading up to earnings, the IV will soar followed by an IV Crush. You can sell a lot more premium during this time, if you can live with the possibility of a big move UP in the stock value. Be careful there so you don't endure an opportunity cost by getting your stock called away (assuming you still want to keep the stock for the long term). A little more that One standard deviation is pretty conservative. TSLA will drive you crazy if you try this.. LOL....and thats why I only "Trade" TSLA using other strategies.
Better way is to trade it on a weekly basis. Pick a strike price that is about 10 to 20% above yours and if the stock moves up through it. Just buy back the expiring option and then sell the next week at roughly the same price....AND You're get out, or strike price will be 10% higher than before! I've done this for years and it works. Especially on NVDA lately.
@@friedbeefjerky he means, if you sell a call, and you lose money on it bc the value o the stock goes up, then you "roll" your option. which means buy back your call at a loss, then sell a new call at 10 percent higher that expires in a week, and hope you get your money back
@@10010x0x0x01101XX0X1 Right on. Another way is to closely monitor your stock price. I set up ALERTS to notify me if the stock is getting close to the short strike. I like to roll up and out actually.... and before it penetrates the short strike.
Always remember that when you sell, you can be assigned at any time (called American Options). We tend to assume you can only get assigned at expiration (European Options). Also, always calculate the value of dividends into your decision to stay in a trade. A buyer may still assign you even if it costs them more because the stock's dividends compensate for the extra cost. Ask me how i know.
Dividend and also prevailing interest rate when the extrinsic value becomes insignificant. The number one reason for early assignment is lack of extrinsic value.
Great point. A stock is more likely to be called away during ex-dividend time AND with very little to no extrinsic value remaining. Thanks for pointing that out... I'm sure it never happened to us tho ;-)
I have done this very same thing for a while, knowing that time has lots of value. I actually just set a "good til cancelled" order to buy back at the 10% value, then I just wait for it to happen, rinse and repeat. Easy peasy. Thanks for sharing
Amazing video, you work for 40yrs to have $1M in your retirement, meanwhile some people are putting just $10K into trading from just few months ago and now they are multimillionaires
Same here all thanks to Gillian Sara sheeran, she has always been there to guide me through with detailed analysis and recommendations that I wouldn't have access to otherwise.
I'm a bit perplexed seeing Gillian Sara Sheeran been mentioned here also Didn't know she has been good to so many people too this is wonderful, I'm in my fifth trade with her and it has been super
@GregsNeuroI'm sure her service is available outside the US, but you gotta ask her first. I'm positive because I have a friend who stays in the UK and using her services too. You should ask her though to know if she offers her service to your country.
Sweet video guys as you really show investors the benefit of having a covered call strategy instead of just sitting around collecting dividends. Any investor who doesn't want to learn how to do this is an absolute idiot!!!
Right on. When I first learned about options, I thought I had to wait until expy date! LOL. You are not alone my friend. Today I open and close option positions reguarly rather than waiting for expy date. The option contract always has some value (price) before expy date. If you are up 90% on a Covered Call, then CLOSE IT at any time before expy. I've had Covered Calls reach 90% premium in less than one week. I 'buy them to close' once they hit 90% of premium made no matter how many days to expy. Also I buy stocks only that are good companies. The Covered Calls are simply gravy on the potatoes. It's like collecting rent from a tenant while I own the stock and wait for the stock to hit my target sell price... but that's another analogy that requires another post. Right on bro.
I am new to this. When you sell the covered call with a strike price so close to the real price aren't you risking the option getting called away immediately before expiration?
. Why I prefer NVIDIA is that they are better placed to maintain long term growth potential, and provide a platform for other AI companies. I know someone who has made more than 200% from NVIDIA. I'll also take any other recommendations you make.
Not offering any particular advice, but I can assure you that most stocks still have growth potential. Re-distributing is not as hard as many people think it is. Ordinary investors lack the requisite level of diligence, so having a financial advisor on board is usually highly beneficial. In the market, this is how people generate enormous profits.
Absolutely! A skilled coach helped grow my investments from $321k to over $750k, primarily through stocks, ETFs, and bonds. I anticipate housing prices will stay stable until more homes become available.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
SHARON CRUMP CLINE is her name. She is regarded as a genius in her area and works for Empower Financial Services. By looking her up online, you can quickly verify her level of experience. She is well knowledgeable about financial markets.
There is a glaring error in your 2nd example as the call sold short should be bought back at a loss to close the transaction since it expired IN THE MONEY (debit from buy back March 150 calls with stock price at $154.34)! Your math of $4770 profit for the calls sold would be ultimately reduced by the cost of buying back the same calls in the money at expiration.
This bothered me too. I think the buyer of the calls would have to pay $15,000 each to exercise them. To supply the required 1000 shares (10 contracts) at 154.34, the seller would have to buy them for $154,340, which is a $4340 loss. So if I understand correctly the actual profit would be $26,110, not $30,450. Let me know if that makes sense.
In the example, there is no exercising of the options. The trader simply sells the long July 100 calls and should in theory, buy back the March 150 calls since it expired in the money at $154.34 to close out the transaction. The March 150 calls were sold for $4770; representing a profit. However, whatever the price is at expiration, which would be higher, represents the loss from the covered call campaign. This is the missing piece from the example. They did get $4770 credit from selling the March 150 calls originally, but there should also be a debit of $XXXX.XX for buying back at expiration to give us a true picture of the P&L. So the entire example is lacking.
So on thinkorswim there is an ondemand option where you can replay history and I went to March 18, 2022 and like the video says it closed that day at $154.60. So I went into the options chain to see how much were the 150s selling for to buy back and it would have been $5.00 x 100 x 10 so that is a debit of -$5,000 so the final profit is $30,450 - $5,450 total net profit is $25,450 This is an 88% ROI. So still really good but not the 105.29% claimed.
Thanks - these are great ! I dont follow the "close" on the synthetic call with FNV, did yuo wait for assignment ? Either way I dotn see the accounting for the short call assignment or byu back. Since its been a year there are lots of COVERED CALL ETFs now... they do the work for you and pay a large dividend ! CONY is crazy ... 100% yield and more !
I dont even know where the stock market is headed to right now. my portfolio of around 200k is not increasing more than 5% and people are predicting a crash .
A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
My CFA *Julianne Iwersen-Niemann* a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market..
Thank you for saving me hours of back and forth investigation into the markets... I simply copied and pasted her full name into my browser, and her website came up first in search results. She looks flawless.
May I have a question - PMCC = synthetic call - if the underlying price goes above the short call strike - at which level would you close or roll it out? 100% "loss" on short call price or more (e.g. credit 100, current loss 100) ?
Since the Delta of the long side will be higher than the Delta of the short side, the increase in cost to buy back the short side will be less than the increase in value of the long side. So you can just sell your long side, buy back your short side, take the profit. Then start over.
worse case scenario is that the underlying price falls below your deep in the money call, so you lose 100% of what you bought the long call for. the deeper in the money you go, the more protected you are from 100% loss.
Call expires worthless and you lose all the money that you paid to buy your CALL, minus the credit premium that you collected on your Covered Calls that you sold. Think of it this way. This would occur if your underlying stock falls below the deep in the money call strike. The only value remaining at that point would be it's extrinsic value. On expiration date, your extrinsic value amounts to $0. The only remaining value is your intrinsic value. You pay 20K for your Calls. So you are -20K. You receive +5K on your premiums from selling Covered Calls. You are effectively down -15K. These arent real numbers. The numbers are just for illustrative purposes. Remember too that when you buy an option contract, it decays on a daily basis. So the value of that Call becomes less and less even if the stock price remains the same, or in many cases, even if the stock price creeps up slowly. This is why he is buying deep in the money calls. Intrinsic value (in the money) options aren't eaten by theta (time) decay, but extrinsic value (out of the money) options do experience theta (time) decay in their value, and it's exponential in the last month leading up to expy date.
Trying to follow strategy 2: bought long (July) calls, sold Feb & March. Spent $24k... (15:41) What if (strategy 2) that short term sold call finishes above the strike? (16:30) I don't see the cost of buying back the $150 calls that are ITM at $154... I do see the proceeds from selling the July calls that were at $100 strike... BUT, don't you need to have some shares to sell or show the cost of closing that call?
Thank you so much for your video, you opened a door for me to earn some passive income in my retirement. I have one question about selling cover call. If I sell a cover call at $10 which expire at the end of next month, from now and the end of the month, if the price goes higher than $10 in the middle of the contract, will my shares be called away on that date or at the end of the month?
They could be called away mid-month, but they usually are not. The main reason a person might call your shares is if the stock is about to go ex-dividend and they want to pick up the dividend. Otherwise, there is no incentive to spend his money on buying your shares until the end of the month.
Good video. I'm interested in the mechanics of how the trades are made. I've been performing covered calls AKA "Sell to open". Once the Contract reaches a specified value I would like to "Buy to close" the contract. Once the stock pops again I would "Sell to open" a new contract. Is this what your describe in your video ?
Once the short call is closed for 10% of original price, is the strategy to immediately Sell a new Covered Call? Or wait till stock increases (and if so how close to original stock price)?
With the basics explained, this video was actually helpful for me. More of such videos will get me on the right track of crypto trading. Kudos bro! and thanks for this video. The insights I got would make it easier for me to learn from other trading experts
Very interesting . Let's say have 1000 shares but want to reduce exposure to that particular stock and keep only 500 shares. Can sell covered calls and allow shares to be called away. In this case what should the strategy be , sell long dated calls/ leaps ( to get a lot of time value premium) at a strike which is fairly close to the purchase price ( delta around 90 ) or 2. Sell monthly / weekly calls at a strike which is say at 90% delta ..( so good chance of shares being called away). 3. On the leaps will the shares get called away or will still be holding them for some time even though they are now in the money for the buyer....but still a long time for the option to expire.
This is a great trade. What is the original cost of Trade for the 300 shares please? What prompts the trader to sell 3 covered calls @ 170 strike? Cost of ownership determines the strike isn't it? Please clarify. Thanks.
Well i noticed a second "typo" you seemed to select the 130 call but the slide shows $200... similar thing on the IRON Condor video. And just noticed "close at $260.01 " but the text box says 206.02. When leraning the consistency is important. thanks
In the first example, if you were to buy Apple shares at $171 and sold ITM covered calls at $170, wouldn’t the shares you bought at $171 be called away from you immediately?
No, the call buyer has the right to buy them but not the obligation when then go in the money. Most of the time the buyer of the call will just sell the call because the call is worth more money than exercising the option. For example, you sell the $170 option for say $2.00. If that person exercises it, he loses the $2.00 he spent to get the option and gains $1.00 ( $171-170) on exercising the option. He has a $1.00 loss.
I appreciate your approach to teaching.. To my understanding this just proves how much we need an edge as investors because playing the market like everyone else just isn’t good enough, we just need to hold onto our hopes and wait to see how things turn out because market movements are almost always unpredictable. In my portfolio, I'm noticing more red than green.
As with an my big financial decision, it’s important to keep your guard’s up for economic risks. However, smart planning, time management and seeking advise from a financial adviser can help keep you and your money safe
Yes i agree and right now the markets are going berserk right now. This is the best time to watch them, get to know them better, and strike when the opportunity presents itself. I learned that from my mentor
Sure, the Investment advisor that guides me is '''Natalie Noel Burns 'and she's renowned and has quite a following. So it shouldn't be a hassle finding her. Just look her up.
Natalie Noel Burns is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
What would happen if a call you sold using a synthetic covered call gets called away before expiration? will they execute the leap call I bought ? what are the cons
Had the same question. Do they automatically execute the leap? Do I have to have extra cash to buy shares on both the call I sold and the leap I bought? The net would still be positive, but if I suddenly have to have enough cash to buy shares on both sides of the trade, I’m in trouble.
Two short answers... (1) If you have 100 shares of stock already in your portfolio, then those will be sold along with a debit incurred for the assignment. If not, and you only have the LONG (Buy/LEAPS) Call, when your SHORT (Sell) Call gets assigned, (2) you will be debited "x" amount for buying back your SHORT Call, and your broker will simultaneously exercise LONG (Buy/LEAPS) Call at the closing price of stock the day your SHORT (Sell) Call got assigned for credits. Additional information (you may skip reading this as I got long winded)... Depending on how deep ITM you placed your LONG (Buy/LEAPS) Call and how far your DTE is on this LONG (Buy/LEAPS) Call VS. how much debit you had to pay for buying back your SHORT (Sell) Call, and how far above your strike price is for this SHORT (Sell) Call when you first started this Synthetic Covered Call can result in a plethora of scenarios. (1) Substantial loss (shallow ITM instead of deep ITM LONG Call with close/tight SHORT call vs far OTM SHORT Call strike, and shorter DTE vs longer DTE with respect to the SHORT Call [30-day, vs 60-day, vs 90-day]). (2) May break even (again "may). (3) If lucky with everything falling into place just correctly, a satisfactory gain (from a deep ITM LONG Call [capital intensive], with a very far/high strike on your SHORT Call [Low Premium to offset debit paid on the LONG Call], and a good enough time has passed that the SHORT Call's value has decayed thru Theta albeit assigned for debit, but the LONG Call had grown in value to offset any debit on the entire transaction of assignment related to the SHORT Call whilst exercised on the LONG at the end of the trading day).
Also, what will be the impact on the Dividend payouts? In your example Apple is a dividend paying stock, will the broker adjust dividend payable from the credit you have collected. Please help to clarify. Many thanks.
funny comment. Gave me a chuckle. Seriously tho you can make 90% of your option premium weeks before expy date, and then just buy to close when you reach that point. Don't have to wait until the Friday expy date. I know you realize that to be the case, but many beginner option traders have no clue that you can close the trade way before expy date.
In a Portfolio Margin, even if we have a protective put, then the Covered Calls require lots of collateral. Any way to minimize the collateral? Is it related to delta possibly?
Great video!! Thanks. Question, I've traded covered calls before but never synthetic covered calls. Where I get a bad feeling in my stomach is when I play around and "buy" options on a theory I have on the direction or trading range of a stock. So in the example given on the synthetic covered call on the gold mining stock, what if the trader's theory was wrong and the stock went down significantly in while he held those costly deep in the money calls that he bought? I believe that could result in significant loss on that strategy but I may not be seeing all the possibilities on recovering, even if the stock fell precipitously while he held the deep in the money call option until expiration let's say. How would one recover with little damage if the thesis was wrong and he held costly calls while the stock fell like a rock and stayed down? Thanks very much for clearing this up for me because I'm a bit afraid of the synthetic covered call and maybe I shouldn't be.
No, you should be a bit afraid of synthetic-covered calls. Options are NOT a storehouse for value and yes if your positions decrease significantly without recovering you will wine-up with a significant loss. You could roll your credit down to capture more premium however this can induce more risk. The best stance is to take your losses and move on. Remember greater potential for gain also increases your RISK. DITM strategies are not bad if you can control your emotions and have the ability to monitor your account daily (in other words, you are a trader, remember these videos are geared toward people who are option traders and those who would like to become option traders). If not hire a trader (who's willing to "run money") to do this for you.
@@stanmanmedia agreed. However you've got to understand that this is a corporate channel. They are speaking to potential clients. They do a very good job of presenting the information for marketing purposes. There are whole courses on risk management that I'm sure you'd get into if you were to get more involved ($$) with their training.
When you do the synthetic covered call you want to buy 1) deep in the money and 2) far far from expiration (for me that's usually two years out or more). Two things happen at that magic place. 1) Δ delta is close or at 1, so the price change in the call is in near perfect synch with the underlying and 2) Θ theta is close to 0, so the time value decay is insignificant. This gives you a long time to be right on direction, and a long time to capture Θ theta in the opposite direction on the near expiration short calls, and allows you to pick lower Δ deltas on the short side and still overcompensate on the Θ theta decay. As time passes and you write more and short calls against the long call, you keep amassing short call premium, and your need to be correct on the direction in order to make a positive return becomes less and less critical.
Great video, Thank you! Aren't you suggesting selling covered calls with a very high delta, which might work in a bearish market? But at what point do you close the position when the price reverses? Let's say you still have 20 DTE and the stock price is ITM now. Do you run the risk of the option buyer exercising his/her long call? Or does that happen only on the day of expiration?
You can get assigned early. I was just assigned on a stock on Thursday AM before the market opened. I intended to roll it that day. I was not happy because it was deep in the money, now I hold 400 shares. Since it is deep in the money, I have to sell calls 3-4 weeks out to get a decent premium. Next time I'll roll a few days earlier.
@@FBAHSY Thanks! This helps. That's what I read on other forums too. You were selling puts, I assume. In my case, I don't want to sell my shares for 2 reasons. 1. I intend to hold them long-term. 2. The capital gains that you incur, esp when you are sitting on profits. Personally, It's better to sell way OTM calls for a lower premium.
@@raghavanprabhu In my example, I was selling puts but I sell naked and covered calls too. I have had shares called away from, but there were no capital gains because I'm trading frequently so they count as regular income. You will have to sell OTM covered calls and watch to make sure they don't go in the money. If they go in the money then you need to roll them. Watch for earnings, the price could shoot up on that day past your strike. Generally, people don't exercise the shares early unless the shares are near the ex-dividend date and they want to collect the dividend. Good luck!
When your short calls are ITM, if the option price plus the strike price is greater than the stock price by say 10 or 15 cents, you are unlikely to get exercised (except sometimes when the stock is going ex-div). If there is very little time value left in the short option then it's time to manage the position.
For American style options, yes. Euro options can only be assigned at expiration, but you can buy/sell the option early. I was surprised to be assigned the very next day an ITM put, so it does happen.
@Lakenheathdog & @howardlewis3405 There is no cost since the short options were allowed to expire and the trade was closed. (maybe some transaction fees, or you could compare it to an uncovered trade with only long options or stock and the "cost" would be giving up the $4.60 difference between the short strike and the closing price that day, assuming a compared uncovered position were closed on the same day for comparison's sake)
Thanks for highlighting. That’s a profound error on their part as the short call is well in the money and will have to be bought back at a loss thus affecting the P&L. It’s seems just the opposite of what he is saying.
I want to understand something. If you sell a covered call & then buy it back does that break your obligation to sell your shares at the strike price-if it were to reach the strike price-as you are now the holder of the option contract?
Usually on the expy date, HOWEVER in the USA the stock can be called away (sold) at any time. Realistically this doesn't happen until you get about 10 days out AND with an impending ex-dividend date. As soon as there is hardly any extrinsic value remaining in the option is when you should start worrying (which is near expiration). I know some traders who always close their trades no later than 21 DTE, but that's another topic.
Thanks for the video. Does the 2nd methos of synthetic covered call allow trader to not have $127000 capital? In order words, yes we use less capital to do this trade, but the broker sees the "in the money calls" that we bought expring in 6 month as the coverage for the next month calls we sell? I'm not sure, but I think you need to have $127k + 29k(cost of buying calls) in your account to trade this method even if you are not using that capital. My reason is, if everything goes against you, you could lose on your sold calls one month ahead if the stock closes at $151, and then comes down to $99 on July's expiration. Where is the coverage in broker's eyes? Correct me if I am wrong.
My second comment is again about the 2nd method. When the FNV is at $147, it would be safer to sell the March calls a little further out, maybe at 160 or 170 even, instead of 150. This would've prevented the loss when it hit 154 strike at expiration. Also, the loss of the in the money expiration was missing in the calcs at 16:38 minutes, resulting much less gain. Also, this example was very idealistic. If the stock goes to $110, what would happen to the $29k we invested in calls vs the profit we gain from selling out of money calls? I think a study on a strategy should cover all senarios, or not be presented as a profitable one. Otherwise, we could just buy naked calls, inest only few hundred bucks and present a big profit since the stock rallied in our favor. Not trying to be negative but learn and be more realistic.
Something that I am a little confused on. If the stock price reaches or exceeds the strike price before expiry the option holder has the right to exercise that option. Correct?
Seems like you need a crazy amount of money or margin. As a new trader will they let you do any of this? Seems like there would be a big catch or everyone would be doing this
Don't get me wrong, I think this is great info and appreciate it, but what if you don't have the +$25k sitting around to get into the first option call to begin with? 😅
You can do it on a smaller scale. IE buy less calls. Instead of buying 10 call contacts, you can buy 1 call contract.... and then sell one Covered Call contract against it.
@@RodSerling-y6p But a small scale means small returns and losses too.... No scale matters because for someone like the original writer they seem interested in similar numbers....
I sell puts for credits but my question is if I roll out an option say for 2 months and collect $500 worth of credits if I decide to get assigned at $50 are my credits of 500 applied to the assignment price of $50 so is my cost average $45? I watch alot of content related to options and no one has ever mentioned what happens when assigned after collecting credits.
Your stock is automatically sold (called away) at $50 price. That's what you would base your capital gains on that stock sale. The $500 premium is a separate transaction and is to be treated as extra income. Effectively your average cost basis is $45, but it's not to be accounted for in that fashion. Good question btw....
Someone please get back to me on this. I e. Stock goes to 180 ,the buyer of the 170 should be able to. Buy the stock at 170 and sell it at 180 right ?????
What was the premium of the call just before the expiration date? Here is a better way to play that back half. Place an order to sell a $200 call for July 23rd at a strike price of $2000. This would have been triggered some time before the expiration date and this trader would have gained an extra $2K.
I'm convinced that investing $50k-100k in the right company before it goes big is more important than saving for retirement. However, picking the right company is so hard that saving might be safer, cuz who would've guessed Nvda? I have around $200k in a HYSA and want to invest. What are the best opportunities now?
I believe investors should start with S&P 500/ETFs for a solid foundation, then diversify across asset classes and maintain disciplined, regular investing to minimize risks and maximize growth.
Interesting. For someone starting with $200k, begin with S&P 500 ETFs, diversify across asset classes, and invest consistently to minimize risks and maximize growth. Partnering with a financial advisor can help streamline your strategy. This approach turned $80k into $53,000 in annual dividends.
I'm a 42-year-old QA Specialist at Confluera, with an annual income of $150,000. I'm keen on exploring short-term investment opportunities, What would be the most suitable strategy to achieve my goals?
Yeah, brokerage AdvisoRs could make a lot of difference. Bloomberg and other finance media have been recording cases of investors raking in 6 to 7 digits in a space of months. So, I think there are a lot of wealth transfer in this downtime if you know where to look. I have been using an FA since 2020, and the least I returned was $140k ROI, and this does not include capital gain.
I really want to get in with a financial advisor this year, especially as all markets are hitting lows. I don't want to be too optimistic and end up losing everything.
I've shuffled through investment-advisers in the past and so far JENIENNE MINITER FAGAN has proved to be the most effective and well grounded, she has quite an audience so you can easily just reach her on the web to gain access to her, just look-the name up
STEH I'M CONFUSED, So you collected the premium but the stock you are holding is cratering so you collected $6500 in premium but 300 shares lost about 4500 in value (not exact) so your net is $2000 after 2 months ... doesn't seem like a good deal to me. Please correct me if I am wrong. thanks
I didn't know one could fulfill assignment of a "synthetically" covered call at 154.60 by selling a deep in the money covered call at 100. While I'd certainly wish to understand how this strategy could go wrong and how best to manage it, it is impressive what leverage can do. I'd really like to know the details of how the entire transaction is settled at the time of selling the in the money 100 call. How exactly does the purchaser of the 154.60 call option get their 100 shares delivered? Is this done by a market maker or the broker? Pretty fascinating.
These are very valuable rules for anybody who wants to get rich. Unfortunately, most people who will watch this video will not really be able to apply the principles. We may not want to admit, but as Warren Buffett once said, investing is like any other profession-- it requires a certain level of expertise. No surprise that some people are losing a lot of money in the bear market, while others are making hundreds of thousands in profit. I just don't know how they do it. I have about $109k now to put in the market.
Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money. I know someone who made over $350k in this recession influenced market, but to the best of my knowledge, it was through a financial advisor.
True, A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. $850k so far.
Cant reveal much info, Catherine Morrison Evans is the shrewd advisor responsible for my portfolio success, it's only right you look her up and confirm yourself.
The second example of a synthetic covered call loses another 4k profit to close out buying back the 10 March 150 calls at an intrinsic value of $4. That profit is 26k not $30k. Also, buying the July 100 call at the bottom of the range would not be as profitable if FNV was trading at just below 150 instead. That huge profit disappears due to Theta later on and you are not paying 29k but 70k or more.
I know CC ETFs do this all the time so I must be missing something. - first example, CC sold @ 170 strike for $11.43. APPL then rallies to $180 but if it goes another ~$1.50 higher those calls get assigned. Oops. No mention of that. I’ve then pocketed the 11.43 but sold the shares for $170. Now I’m even with what I’d have made just hanging on to the shares which is fine but to continue on with the plan I have to buy the shares back or the whole sequence dies & I also have tax on the full capital gain. Maybe ok if I’m a pure trader I guess but if I’m just adding some points to my yield maybe not so great. Seems to me at the very least the math is a little wonky.
Options course ua-cam.com/video/w_BjFmbwbYA/v-deo.htmlfeature=shared
Becoming a good trader takes time and patience. When i first got into trading i was liquidated twice, and lost my entire mortgage deposit. I could have given up, but decided to learn how to trade and put it into practice. 4 years later and i am glad i made that decision.
My portfolio has good companies, however it has been stalling since last year. I have approximately $200k stagnant in my reserve that needs growth.
I agree, that's the more reason I prefer my day to day invt decisions being guided by a invt-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using a invt-coach for over 2years+ and I've netted over 1.5million
I've been thinking of going that route, been holding on to a bunch of stocks that keeps tanking and I don't know if to keep holding or just dump them, think you inv-coach could guide me with portfolio-restructuring
‘Grace Adams Cook’ is the licensed advisor I use. Just research the name, you’d find necessary details to work with a correspondence to set up an appointment.
I looked her up, and I have sent her an email. I hope she gets back to me soon. Thank you
Great video. I watch several youtube videos on how to trade in the market but haven't made any headstart because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands.
The most important thing that should be on everyone mind currently should be to invest in different sources of income that doesn't depend on the government. Especially with the current economic crisis around the word. This is still a good time to invest in various stocks, Gold, silver and digital currencies.If your financial understanding is lacking, see a financial consultant.
Money advice is subjective, what works for you may not work for someone else, but it's always better to plan. I'm quite lucky exposed to personal finance at an early age, started job 19, bought first home 28, got laid-off work 36 amid covid-outbreak, and at once I consulted an advisor to handle growing my finance. As of today, I'm only 25% short of my $1m goal after subsequent investments.
I've worked in real estate for over 25 years and have neglected a major stock portfolio, however I need a different plan now... mind if I look up the professional guiding you please?
My CFA, Judith B. Richards, is a renowned figure in her field. I recommend researching her name online; you’ll find all her credentials and everything you need to work with a reliable professional. With many years of experience, she is a valuable resource for anyone looking to navigate the financial market. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Thank you for saving me hours of back and forth investigation into the markets. found her web instantly. After reviewing her credentials and conducting due diligence, i reached out to her.
To achieve a secure retirement, aiming to save at least 15% of your income in a 401(k) is advisable. Online tools can assist in calculating the best savings strategy for you, considering factors like age and income. Consistently saving this percentage can help build your retirement fund effectively, thanks to the benefits of compound interest.
Tell me about it. My 401k? Practically useless right now. I’ve got over $500k in there, but with everything going on, I’m wondering if I should just cash out and figure something else out. I’m getting closer to retirement, and the idea of relying on that fund is stressing me out.
Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out. I currently have 75% SCHD and 25% ROTH IRA. Brokerage account is 40% VOO, 35% SCHD, 25% XLK. Combine balance ~$3.3m Less than 3 years until retirement.... I have about 400k in cash. My portfolio has yielded far more than I expected for my retirement. Kudos to my advisor.
@@TungsClementes
Well it seems like a lot of your interest is riding on your source, I could really get well accustomed to your viewpoint, get me involved.
That's quite remarkable! I'm genuinely interested in benefiting from the guidance of such experienced advisors, especially considering the current state of my struggling portfolio. May I know the names of the advisors who has been assisting you in navigating these financial challenges?
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with *MONICA AYAKO VOS* for about five years now, and her performance has been consistently impressive.
Selling a $TSLA covered call option with a 59 Delta is asking for it to be called away. Takeaway? -Select a lower Delta or select a strike price where you realistically foresee a legitimate resistance. Don't be tempted by high premium. Especially when $TSLA is turning and burning BULLISH. Good lesson. Thanks.
My second comment is again about the 2nd method. When the FNV is at $147, it would be safer to sell the March calls a little further out, maybe at 160 or 170 even, instead of 150. This would've prevented the loss when it hit 154 strike at expiration. Also, the loss of the in the money expiration was missing in the calcs at 16:38 minutes, resulting much less gain. Also, this example was very idealistic. If the stock goes to $110, what would happen to the $29k we invested in calls vs the profit we gain from selling out of money calls? I think a study on a strategy should cover all senarios, or not be presented as a profitable one. Otherwise, we could just buy naked calls, invest only few hundred bucks and present a big profit since the stock rallied in our favor. Not trying to be negative but learn and be more realistic.
Same question I had, what if FNV tanked and stayed down until expiration of the calls bought. Knowing how to deal with that scenario would also be helpful.
@@stanmanmedia they don't read or respond. They are just advertising I guess.
@@stanmanmediaYou always need a stop loss on any trade. And don’t violate it.
You are right. I agree with you. Sure it takes less leverage to buy the CALLS, but there's an expy date which means that the stock has to perform in that time frame. The clock is always ticking on those lottery ticket CALLS that you buy. That's the problem with the poor man's synthetic COVERED CALL. On the other hand, If you own the stock outright, then there is no expy date. You can hold the stock as long as you like until the rebound happens (assuming it's a good company). Also, on your first point. Sure he left money on the table. IE He limited his upside to $150 share price, but that was his original thesis resistance level. His resistance was $150, and he was right. It did hit $150 and still made money. If he owned the stock outright with no options, he would have sold it for $150 anyways unless there was a big 'gap up' before the market opened. Thank you for your contribution to this discussion.
These are great tips. As for finding the right strike price, if it’s a stock I want to keep, I look for delta in the .15 to .2 range.
I think investors should always put their cash to work, especially In 2025, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks against next year. Hope to make millions in 2025
The deeper your investment roots, the stronger your financial security will be in the future.
Exactly! With my adviser, I’ve cultivated deep investment roots, strengthening my financial security for the future.
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
My CFA Julianne Iwersen Niemann a renowned figure in her line of work. I recommend researching her credentials further.
Thank you for this amazing tip. I just looked the name up and wrote her
Great info as usual, but I wish more often SMB would cover what to do when these trades move against you...especially if it moves a lot against you.
Yeah, but that like, hardly ever happens. : )
Agreed. I've gotten hit with pretty substantial floating losses from market downturns -- several times over the last year or two. It's knocked me down below PDT and I've been stuck, unable to trade because of it...all because I didn't have the appropriate safeguards in place. I've always heard covered calls referred to as relatively safe -- I'd like to learn how to handle this scenario.
@@elroyblackbean Good question. My take on Covered Calls is that it's a way to skim a little extra income from the stocks you hold for longer term investment (not trading). A good rule of thumb is to sell 15 Delta. You are not going to get a ton of premium, but the main objective is to hold the stock until it hits an intrinsic value where you want to sell it. In the interim tho, I pick up some extra income while watching the stock go up to my intrinsic value target. Also, since I do this for long term holding stocks, I am not overly concerned about the temporary ups and downs of the market. I do this only on very financially solid companies (stocks) that I want to own for a long term. If you are losing your ass on the actual stock price of the stock, then look for more financially sound companies to sell Covered Calls on (AAPL, AMZN, MSFT, GOOGL or ETFs like SPY or VOO or QQQ). I don't look at selling Covered Calls really as a "trade" move. It's just a means to pick up a few extra bucks in premium while I enjoy the longer journey of watching my mega stock appreciate in value. There is a danger too that with some of these stocks, they are considered "growth" so it's feaible that they could rise so fast as to blow through your short strike on you Covered Call. I watch mine daily, and don't heistate to roll them UP AND OUT if the short strike is being tested....assuming I want to continue holding my stock by preventing it from being called away. You can also use technical analysis and sell Covered Calls only when they are at a clearly defined Support. No guarantees that it won't keep going up, but at least you are dealing with probability. btw.. this is why i use 15 Delta. It's a pretty conservative Delta to choose a strike that most likely wont be tested. Don't expect to get rich off the premium on these 15 Delta option contracts, but in the long run you will pick up some xtra cash along the way. As always, there's more that one way to skin a cat, so do what you feel is best for you.
One more point. Leading up to earnings, the IV will soar followed by an IV Crush. You can sell a lot more premium during this time, if you can live with the possibility of a big move UP in the stock value. Be careful there so you don't endure an opportunity cost by getting your stock called away (assuming you still want to keep the stock for the long term). A little more that One standard deviation is pretty conservative. TSLA will drive you crazy if you try this.. LOL....and thats why I only "Trade" TSLA using other strategies.
Why didn’t he have the stock called away at 180? (He’d have the Apple stock called away at that time , wouldn’t he?
Better way is to trade it on a weekly basis. Pick a strike price that is about 10 to 20% above yours and if the stock moves up through it. Just buy back the expiring option and then sell the next week at roughly the same price....AND You're get out, or strike price will be 10% higher than before! I've done this for years and it works. Especially on NVDA lately.
Smart. This is how it’s done
What do you mean when you say sell the next week at roughly the same price? Would you mind explaining this a bit more?
@@friedbeefjerky he means, if you sell a call, and you lose money on it bc the value o the stock goes up, then you "roll" your option. which means buy back your call at a loss, then sell a new call at 10 percent higher that expires in a week, and hope you get your money back
@@10010x0x0x01101XX0X1 when do you decide to roll when it’s above the strike price? Look at the momentum and news and make a gut call?
@@10010x0x0x01101XX0X1 Right on. Another way is to closely monitor your stock price. I set up ALERTS to notify me if the stock is getting close to the short strike. I like to roll up and out actually.... and before it penetrates the short strike.
Always remember that when you sell, you can be assigned at any time (called American Options). We tend to assume you can only get assigned at expiration (European Options). Also, always calculate the value of dividends into your decision to stay in a trade. A buyer may still assign you even if it costs them more because the stock's dividends compensate for the extra cost. Ask me how i know.
I always wonder what is the probability of the buyer of the option exercise it before the expiration date (American execution).
@@ramses4321 Random. I just got early assigned today.
Dividend and also prevailing interest rate when the extrinsic value becomes insignificant. The number one reason for early assignment is lack of extrinsic value.
I bet you know the hard way.
Great point. A stock is more likely to be called away during ex-dividend time AND with very little to no extrinsic value remaining. Thanks for pointing that out... I'm sure it never happened to us tho ;-)
I have done this very same thing for a while, knowing that time has lots of value. I actually just set a "good til cancelled" order to buy back at the 10% value, then I just wait for it to happen, rinse and repeat. Easy peasy. Thanks for sharing
Amazing video, you work for 40yrs to have $1M in your retirement, meanwhile some people are putting just $10K into trading from just few months ago and now they are multimillionaires
That's awesome!!! I know nothing about investment and I'm keen on getting started. What are your strategies?
Venturing into Crypto is a good idea, a good trading system would put you through many days of success.
Same here all thanks to Gillian Sara sheeran, she has always been there to guide me through with detailed analysis and recommendations that I wouldn't have access to otherwise.
I'm a bit perplexed seeing Gillian Sara Sheeran been mentioned here also Didn't know she has been good to so many people too this is wonderful, I'm in my fifth trade with her and it has been super
@GregsNeuroI'm sure her service is available outside the US, but you gotta ask her first. I'm positive because I have a friend who stays in the UK and using her services too. You should ask her though to know if she offers her service to your country.
Thank you sir for your videos and your humility to not charge for your valuable mentoring.
Sweet video guys as you really show investors the benefit of having a covered call strategy instead of just sitting around collecting dividends. Any investor who doesn't want to learn how to do this is an absolute idiot!!!
You guys are fantastic. Thank you for sharing ant teaching; much appreciated.
Holy shit i didnt realize i could close out a call and sell more calls such a good way to play volatility
Right on. When I first learned about options, I thought I had to wait until expy date! LOL. You are not alone my friend. Today I open and close option positions reguarly rather than waiting for expy date. The option contract always has some value (price) before expy date. If you are up 90% on a Covered Call, then CLOSE IT at any time before expy.
I've had Covered Calls reach 90% premium in less than one week. I 'buy them to close' once they hit 90% of premium made no matter how many days to expy. Also I buy stocks only that are good companies. The Covered Calls are simply gravy on the potatoes. It's like collecting rent from a tenant while I own the stock and wait for the stock to hit my target sell price... but that's another analogy that requires another post. Right on bro.
Thank you for a succinct presentation video. Very good. Many are long drawn out and hard to watch.
I am new to this. When you sell the covered call with a strike price so close to the real price aren't you risking the option getting called away immediately before expiration?
No has to go to expiration date
. Why I prefer NVIDIA is that they are better placed to maintain long term growth potential, and provide a platform for other AI companies. I know someone who has made more than 200% from NVIDIA. I'll also take any other recommendations you make.
Not offering any particular advice, but I can assure you that most stocks still have growth potential. Re-distributing is not as hard as many people think it is. Ordinary investors lack the requisite level of diligence, so having a financial advisor on board is usually highly beneficial. In the market, this is how people generate enormous profits.
Absolutely! A skilled coach helped grow my investments from $321k to over $750k, primarily through stocks, ETFs, and bonds. I anticipate housing prices will stay stable until more homes become available.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
SHARON CRUMP CLINE is her name. She is regarded as a genius in her area and works for Empower Financial Services. By looking her up online, you can quickly verify her level of experience. She is well knowledgeable about financial markets.
SHARON CRUMP CLINE is the licensed advisor I use and im just putting this out here because you asked.
There is a glaring error in your 2nd example as the call sold short should be bought back at a loss to close the transaction since it expired IN THE MONEY (debit from buy back March 150 calls with stock price at $154.34)! Your math of $4770 profit for the calls sold would be ultimately reduced by the cost of buying back the same calls in the money at expiration.
This bothered me too. I think the buyer of the calls would have to pay $15,000 each to exercise them. To supply the required 1000 shares (10 contracts) at 154.34, the seller would have to buy them for $154,340, which is a $4340 loss. So if I understand correctly the actual profit would be $26,110, not $30,450. Let me know if that makes sense.
In the example, there is no exercising of the options. The trader simply sells the long July 100 calls and should in theory, buy back the March 150 calls since it expired in the money at $154.34 to close out the transaction. The March 150 calls were sold for $4770; representing a profit. However, whatever the price is at expiration, which would be higher, represents the loss from the covered call campaign. This is the missing piece from the example. They did get $4770 credit from selling the March 150 calls originally, but there should also be a debit of $XXXX.XX for buying back at expiration to give us a true picture of the P&L. So the entire example is lacking.
@@whcc3428 thanks the the explanation of closing the transaction. It's a little tricky for the uninitiated.
So on thinkorswim there is an ondemand option where you can replay history and I went to March 18, 2022 and like the video says it closed that day at $154.60. So I went into the options chain to see how much were the 150s selling for to buy back and it would have been
$5.00 x 100 x 10 so that is a debit of -$5,000 so the final profit is $30,450 - $5,450 total net profit is $25,450
This is an 88% ROI. So still really good but not the 105.29% claimed.
The problem I ran into with the synthetic covered call is random assignments. How does the random assignment happen and how to avoid it?
You can't with american options. That's why you do covered calls instead of synthetic
Thanks - these are great ! I dont follow the "close" on the synthetic call with FNV, did yuo wait for assignment ? Either way I dotn see the accounting for the short call assignment or byu back.
Since its been a year there are lots of COVERED CALL ETFs now... they do the work for you and pay a large dividend !
CONY is crazy ... 100% yield and more !
Beautifully explained. Thank you for your experience & wisdom.
I dont even know where the stock market is headed to right now. my portfolio of around 200k is not increasing more than 5% and people are predicting a crash .
i'd advise you redistribute assets in your portfolio with the help of a pro so you don't get burnt in the market
A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
How can I reach this advisers of yours? because I'm seeking for a more effective investment approach on my savings?
My CFA *Julianne Iwersen-Niemann* a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market..
Thank you for saving me hours of back and forth investigation into the markets... I simply copied and pasted her full name into my browser, and her website came up first in search results. She looks flawless.
Excellent video on Covered Call - especially on Synthetic Covered Call - thank you
11:28
that was new to me thanks.
May I have a question - PMCC = synthetic call - if the underlying price goes above the short call strike - at which level would you close or roll it out? 100% "loss" on short call price or more (e.g. credit 100, current loss 100) ?
That is a question for tom sosnof
Since the Delta of the long side will be higher than the Delta of the short side, the increase in cost to buy back the short side will be less than the increase in value of the long side. So you can just sell your long side, buy back your short side, take the profit. Then start over.
@@Kanjicafe Yes, that is clear, the question is WHEN to buyback the short - interested in their approach
what is the worst case scenario losses for a synthetic covered call?
worse case scenario is that the underlying price falls below your deep in the money call, so you lose 100% of what you bought the long call for. the deeper in the money you go, the more protected you are from 100% loss.
Call expires worthless and you lose all the money that you paid to buy your CALL, minus the credit premium that you collected on your Covered Calls that you sold. Think of it this way. This would occur if your underlying stock falls below the deep in the money call strike. The only value remaining at that point would be it's extrinsic value. On expiration date, your extrinsic value amounts to $0. The only remaining value is your intrinsic value. You pay 20K for your Calls. So you are -20K. You receive +5K on your premiums from selling Covered Calls. You are effectively down -15K. These arent real numbers. The numbers are just for illustrative purposes. Remember too that when you buy an option contract, it decays on a daily basis. So the value of that Call becomes less and less even if the stock price remains the same, or in many cases, even if the stock price creeps up slowly. This is why he is buying deep in the money calls. Intrinsic value (in the money) options aren't eaten by theta (time) decay, but extrinsic value (out of the money) options do experience theta (time) decay in their value, and it's exponential in the last month leading up to expy date.
Can you sell calls on the stocks that you bought calls not the stocks?
Amazing explanation. Super simple to understand, thanks!
Glad it was helpful!
Trying to follow strategy 2: bought long (July) calls, sold Feb & March. Spent $24k... (15:41)
What if (strategy 2) that short term sold call finishes above the strike? (16:30)
I don't see the cost of buying back the $150 calls that are ITM at $154...
I do see the proceeds from selling the July calls that were at $100 strike...
BUT, don't you need to have some shares to sell or show the cost of closing that call?
It blows my mind that he's not mentioning anesaurus (where beginners can just copy professionals and be profitable).
Thank you so much for your video, you opened a door for me to earn some passive income in my retirement. I have one question about selling cover call. If I sell a cover call at $10 which expire at the end of next month, from now and the end of the month, if the price goes higher than $10 in the middle of the contract, will my shares be called away on that date or at the end of the month?
They could be called away mid-month, but they usually are not. The main reason a person might call your shares is if the stock is about to go ex-dividend and they want to pick up the dividend. Otherwise, there is no incentive to spend his money on buying your shares until the end of the month.
Good video.
I'm interested in the mechanics of how the trades are made.
I've been performing covered calls AKA "Sell to open".
Once the Contract reaches a specified value I would like to "Buy to close" the contract.
Once the stock pops again I would "Sell to open" a new contract.
Is this what your describe in your video ?
Once the short call is closed for 10% of original price, is the strategy to immediately Sell a new Covered Call? Or wait till stock increases (and if so how close to original stock price)?
With the basics explained, this video was actually helpful for me. More of such videos will get me on the right track of crypto trading. Kudos bro! and thanks for this video. The insights I got would make it easier for me to learn from other trading experts
I appreciate these examples.
super!! glad to know when you buy a call option of same day and same strike price it neutralizes the earlier call option
Very clear guys, keep up the good job! 👍
Very interesting . Let's say have 1000 shares but want to reduce exposure to that particular stock and keep only 500 shares.
Can sell covered calls and allow shares to be called away. In this case what should the strategy be , sell long dated calls/ leaps ( to get a lot of time value premium) at a strike which is fairly close to the purchase price ( delta around 90 ) or
2. Sell monthly / weekly calls at a strike which is say at 90% delta ..( so good chance of shares being called away).
3. On the leaps will the shares get called away or will still be holding them for some time even though they are now in the money for the buyer....but still a long time for the option to expire.
This is a great trade. What is the original cost of Trade for the 300 shares please? What prompts the trader to sell 3 covered calls @ 170 strike? Cost of ownership determines the strike isn't it? Please clarify. Thanks.
Well i noticed a second "typo" you seemed to select the 130 call but the slide shows $200... similar thing on the IRON Condor video.
And just noticed "close at $260.01 " but the text box says 206.02. When leraning the consistency is important. thanks
Some years ago you posted a video about converting an equity trading system to using vertical spreads. Do you have a link for it?
In the first example, if you were to buy Apple shares at $171 and sold ITM covered calls at $170, wouldn’t the shares you bought at $171 be called away from you immediately?
No, the call buyer has the right to buy them but not the obligation when then go in the money. Most of the time the buyer of the call will just sell the call because the call is worth more money than exercising the option. For example, you sell the $170 option for say $2.00. If that person exercises it, he loses the $2.00 he spent to get the option and gains $1.00 ( $171-170) on exercising the option. He has a $1.00 loss.
I appreciate your approach to teaching.. To my understanding this just proves how much we need an edge as investors because playing the market like everyone else just isn’t good enough, we just need to hold onto our hopes and wait to see how things turn out because market movements are almost always unpredictable. In my portfolio, I'm noticing more red than green.
As with an my big financial decision, it’s important to keep your guard’s up for economic risks. However, smart planning, time management and seeking advise from a financial adviser can help keep you and your money safe
Yes i agree and right now the markets are going berserk right now. This is the best time to watch them, get to know them better, and strike when the opportunity presents itself. I learned that from my mentor
Mind if I ask you to recommend how to reach this particular coach you using their service? Seems you've figured it all out unlike the rest of us.
Sure, the Investment advisor that guides me is '''Natalie Noel Burns
'and she's renowned and has quite a following. So it shouldn't be a hassle finding her. Just look her up.
Natalie Noel Burns is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
What about the dividends that the Gold Shares would have earned vs the Synthetic's Call
What would happen if a call you sold using a synthetic covered call gets called away before expiration? will they execute the leap call I bought ? what are the cons
Had the same question. Do they automatically execute the leap? Do I have to have extra cash to buy shares on both the call I sold and the leap I bought? The net would still be positive, but if I suddenly have to have enough cash to buy shares on both sides of the trade, I’m in trouble.
Two short answers... (1) If you have 100 shares of stock already in your portfolio, then those will be sold along with a debit incurred for the assignment. If not, and you only have the LONG (Buy/LEAPS) Call, when your SHORT (Sell) Call gets assigned, (2) you will be debited "x" amount for buying back your SHORT Call, and your broker will simultaneously exercise LONG (Buy/LEAPS) Call at the closing price of stock the day your SHORT (Sell) Call got assigned for credits.
Additional information (you may skip reading this as I got long winded)... Depending on how deep ITM you placed your LONG (Buy/LEAPS) Call and how far your DTE is on this LONG (Buy/LEAPS) Call VS. how much debit you had to pay for buying back your SHORT (Sell) Call, and how far above your strike price is for this SHORT (Sell) Call when you first started this Synthetic Covered Call can result in a plethora of scenarios. (1) Substantial loss (shallow ITM instead of deep ITM LONG Call with close/tight SHORT call vs far OTM SHORT Call strike, and shorter DTE vs longer DTE with respect to the SHORT Call [30-day, vs 60-day, vs 90-day]). (2) May break even (again "may). (3) If lucky with everything falling into place just correctly, a satisfactory gain (from a deep ITM LONG Call [capital intensive], with a very far/high strike on your SHORT Call [Low Premium to offset debit paid on the LONG Call], and a good enough time has passed that the SHORT Call's value has decayed thru Theta albeit assigned for debit, but the LONG Call had grown in value to offset any debit on the entire transaction of assignment related to the SHORT Call whilst exercised on the LONG at the end of the trading day).
@1:29 Where is the video? Not that I need to watch it. It just doesn't appear.
ua-cam.com/video/w_BjFmbwbYA/v-deo.htmlfeature=shared
Also, what will be the impact on the Dividend payouts? In your example Apple is a dividend paying stock, will the broker adjust dividend payable from the credit you have collected. Please help to clarify. Many thanks.
Great advice... can use credit call spreads for the same purpose too
The trick to selling options is simply knowing the Friday closing price. How hard can that be?
*Knowing the odds of the strikeprice you've sold.
funny comment. Gave me a chuckle. Seriously tho you can make 90% of your option premium weeks before expy date, and then just buy to close when you reach that point. Don't have to wait until the Friday expy date. I know you realize that to be the case, but many beginner option traders have no clue that you can close the trade way before expy date.
Nice news they make me optimistic on the markets and I'm longing them.
Эта связка - настоящий секрет успеха, я доволен, что нашел её.
In a Portfolio Margin, even if we have a protective put, then the Covered Calls require lots of collateral. Any way to minimize the collateral? Is it related to delta possibly?
It's easy to look back and see how you could have had different results. Woulda coulda shoulda.
So incredible informative and helpful, thank you guys.
Not sure how these guys stay so under the radar. I joined a couple of months ago, and the results speak for themselves.
when you say Joined, do you mean Join with SMB? What is the process?
Are synthetic covered calls the same as "poor man's covered calls"?
yes
@@knproductions5290 I was wondering about that, too. Thank you.
Very informative. Thanks.
Great video!! Thanks. Question, I've traded covered calls before but never synthetic covered calls. Where I get a bad feeling in my stomach is when I play around and "buy" options on a theory I have on the direction or trading range of a stock. So in the example given on the synthetic covered call on the gold mining stock, what if the trader's theory was wrong and the stock went down significantly in while he held those costly deep in the money calls that he bought? I believe that could result in significant loss on that strategy but I may not be seeing all the possibilities on recovering, even if the stock fell precipitously while he held the deep in the money call option until expiration let's say. How would one recover with little damage if the thesis was wrong and he held costly calls while the stock fell like a rock and stayed down? Thanks very much for clearing this up for me because I'm a bit afraid of the synthetic covered call and maybe I shouldn't be.
No, you should be a bit afraid of synthetic-covered calls. Options are NOT a storehouse for value and yes if your positions decrease significantly without recovering you will wine-up with a significant loss. You could roll your credit down to capture more premium however this can induce more risk. The best stance is to take your losses and move on. Remember greater potential for gain also increases your RISK. DITM strategies are not bad if you can control your emotions and have the ability to monitor your account daily (in other words, you are a trader, remember these videos are geared toward people who are option traders and those who would like to become option traders). If not hire a trader (who's willing to "run money") to do this for you.
@@AntonRah great message, yes.. I think these guys should talk about the downside risk if the thesis is wrong!!! Haha
@@stanmanmedia agreed. However you've got to understand that this is a corporate channel. They are speaking to potential clients. They do a very good job of presenting the information for marketing purposes. There are whole courses on risk management that I'm sure you'd get into if you were to get more involved ($$) with their training.
@@AntonRah Totally understand that. They are excellent too!!!
When you do the synthetic covered call you want to buy 1) deep in the money and 2) far far from expiration (for me that's usually two years out or more). Two things happen at that magic place. 1) Δ delta is close or at 1, so the price change in the call is in near perfect synch with the underlying and 2) Θ theta is close to 0, so the time value decay is insignificant. This gives you a long time to be right on direction, and a long time to capture Θ theta in the opposite direction on the near expiration short calls, and allows you to pick lower Δ deltas on the short side and still overcompensate on the Θ theta decay. As time passes and you write more and short calls against the long call, you keep amassing short call premium, and your need to be correct on the direction in order to make a positive return becomes less and less critical.
Do you provide offline classes for options trading
Great video, Thank you! Aren't you suggesting selling covered calls with a very high delta, which might work in a bearish market? But at what point do you close the position when the price reverses? Let's say you still have 20 DTE and the stock price is ITM now. Do you run the risk of the option buyer exercising his/her long call? Or does that happen only on the day of expiration?
You can get assigned early. I was just assigned on a stock on Thursday AM before the market opened. I intended to roll it that day. I was not happy because it was deep in the money, now I hold 400 shares. Since it is deep in the money, I have to sell calls 3-4 weeks out to get a decent premium. Next time I'll roll a few days earlier.
@@FBAHSY Thanks! This helps. That's what I read on other forums too. You were selling puts, I assume. In my case, I don't want to sell my shares for 2 reasons. 1. I intend to hold them long-term. 2. The capital gains that you incur, esp when you are sitting on profits. Personally, It's better to sell way OTM calls for a lower premium.
@@raghavanprabhu In my example, I was selling puts but I sell naked and covered calls too. I have had shares called away from, but there were no capital gains because I'm trading frequently so they count as regular income. You will have to sell OTM covered calls and watch to make sure they don't go in the money. If they go in the money then you need to roll them. Watch for earnings, the price could shoot up on that day past your strike. Generally, people don't exercise the shares early unless the shares are near the ex-dividend date and they want to collect the dividend. Good luck!
When your short calls are ITM, if the option price plus the strike price is greater than the stock price by say 10 or 15 cents, you are unlikely to get exercised (except sometimes when the stock is going ex-div). If there is very little time value left in the short option then it's time to manage the position.
For American style options, yes. Euro options can only be assigned at expiration, but you can buy/sell the option early. I was surprised to be assigned the very next day an ITM put, so it does happen.
Just got into this! Thank you so much. Here comes the money!
careful my friend
Sir,March FNV closing at 154.60 >150, is the premium still $4.77?
@smbcapital I don't think we're seeing the cost of buying back the March 150 calls that were ITM, in the screen at16:30?
Well spotted. Also no account is made of selling covered calls against the stock, which you would expect to do. Still enhanced profits of course.
@Lakenheathdog & @howardlewis3405 There is no cost since the short options were allowed to expire and the trade was closed. (maybe some transaction fees, or you could compare it to an uncovered trade with only long options or stock and the "cost" would be giving up the $4.60 difference between the short strike and the closing price that day, assuming a compared uncovered position were closed on the same day for comparison's sake)
Thanks for highlighting. That’s a profound error on their part as the short call is well in the money and will have to be bought back at a loss thus affecting the P&L. It’s seems just the opposite of what he is saying.
They don't show it, but it likely would still result in an overall profit, but less than they're showing here.
I want to understand something. If you sell a covered call & then buy it back does that break your obligation to sell your shares at the strike price-if it were to reach the strike price-as you are now the holder of the option contract?
If you sell a covered call and then buy it back, you have no obligation because your net position on the option is 0
If the stock is above exercise price, is the stock sold only on the day of expiry or at any time before the call expires?
Usually on the expy date, HOWEVER in the USA the stock can be called away (sold) at any time. Realistically this doesn't happen until you get about 10 days out AND with an impending ex-dividend date. As soon as there is hardly any extrinsic value remaining in the option is when you should start worrying (which is near expiration). I know some traders who always close their trades no later than 21 DTE, but that's another topic.
Thanks for the video. Does the 2nd methos of synthetic covered call allow trader to not have $127000 capital? In order words, yes we use less capital to do this trade, but the broker sees the "in the money calls" that we bought expring in 6 month as the coverage for the next month calls we sell? I'm not sure, but I think you need to have $127k + 29k(cost of buying calls) in your account to trade this method even if you are not using that capital. My reason is, if everything goes against you, you could lose on your sold calls one month ahead if the stock closes at $151, and then comes down to $99 on July's expiration. Where is the coverage in broker's eyes? Correct me if I am wrong.
My second comment is again about the 2nd method. When the FNV is at $147, it would be safer to sell the March calls a little further out, maybe at 160 or 170 even, instead of 150. This would've prevented the loss when it hit 154 strike at expiration. Also, the loss of the in the money expiration was missing in the calcs at 16:38 minutes, resulting much less gain. Also, this example was very idealistic. If the stock goes to $110, what would happen to the $29k we invested in calls vs the profit we gain from selling out of money calls? I think a study on a strategy should cover all senarios, or not be presented as a profitable one. Otherwise, we could just buy naked calls, inest only few hundred bucks and present a big profit since the stock rallied in our favor. Not trying to be negative but learn and be more realistic.
Something that I am a little confused on. If the stock price reaches or exceeds the strike price before expiry the option holder has the right to exercise that option. Correct?
yes
Assuming you can time the dips and recoveries its an excellent plan. 😮
Put an order out for price you want to buy it back at that doesn't expire and it will buy back automatically for you
Golden information 🙏
Is the first strategy conflicting with the third strategy?
Where is the cost related to buyback of March 150 Calls in the FNV example ?
Easy Wheeler market go down, but what happen if market go up ???
Best on stocks you really want to own and hold.
Seems like you need a crazy amount of money or margin. As a new trader will they let you do any of this? Seems like there would be a big catch or everyone would be doing this
remember to calculate commissions and taxes from the overall profits.
Don't get me wrong, I think this is great info and appreciate it, but what if you don't have the +$25k sitting around to get into the first option call to begin with? 😅
worth selling options the money to do stuff is a good question
You can do it on a smaller scale. IE buy less calls. Instead of buying 10 call contacts, you can buy 1 call contract.... and then sell one Covered Call contract against it.
@@RodSerling-y6p But a small scale means small returns and losses too.... No scale matters because for someone like the original writer they seem interested in similar numbers....
I sell puts for credits but my question is if I roll out an option say for 2 months and collect $500 worth of credits if I decide to get assigned at $50 are my credits of 500 applied to the assignment price of $50 so is my cost average $45?
I watch alot of content related to options and no one has ever mentioned what happens when assigned after collecting credits.
Your stock is automatically sold (called away) at $50 price. That's what you would base your capital gains on that stock sale. The $500 premium is a separate transaction and is to be treated as extra income. Effectively your average cost basis is $45, but it's not to be accounted for in that fashion. Good question btw....
If you only have $7000 to start ( my Roth) what stock would you try to get to start this process?
A stock that costs $70 per share
The stock price is less than $70 , but remember to never risk on a small cap companies, always look for a large or mega cap to be on the safer side.
@@vishaltare952 what do you think of OXY?
SLV
Someone please get back to me on this. I e. Stock goes to 180 ,the buyer of the 170 should be able to. Buy the stock at 170 and sell it at 180 right ?????
Yes.
If you keep your position for half the time do you generally only get half the premium
You keep 100% of the premium every time you sell a call
but do they know how to trade a covered zebra for the same profit at less financial risk?
Связка просто топчик, респект!
What was the premium of the call just before the expiration date? Here is a better way to play that back half. Place an order to sell a $200 call for July 23rd at a strike price of $2000. This would have been triggered some time before the expiration date and this trader would have gained an extra $2K.
I'm convinced that investing $50k-100k in the right company before it goes big is more important than saving for retirement. However, picking the right company is so hard that saving might be safer, cuz who would've guessed Nvda? I have around $200k in a HYSA and want to invest. What are the best opportunities now?
I believe investors should start with S&P 500/ETFs for a solid foundation, then diversify across asset classes and maintain disciplined, regular investing to minimize risks and maximize growth.
Interesting. For someone starting with $200k, begin with S&P 500 ETFs, diversify across asset classes, and invest consistently to minimize risks and maximize growth. Partnering with a financial advisor can help streamline your strategy. This approach turned $80k into $53,000 in annual dividends.
I've been considering getting one, but haven't been proactive about it. Can you recommend your advisor? I could really use some assistance.
Sure, Melissa Elise Robinson is the licensed advisor I use. Just research the name. You’d find necessary details on the web to set up an appointment.
I looked up her name online and found her page. I emailed and made an appointment to talk with her. Thanks for the tip
I'm a 42-year-old QA Specialist at Confluera, with an annual income of $150,000. I'm keen on exploring short-term investment opportunities, What would be the most suitable strategy to achieve my goals?
If you're not familiar with market investing tactics, you should get advice from a financial counselor.
Yeah, brokerage AdvisoRs could make a lot of difference. Bloomberg and other finance media have been recording cases of investors raking in 6 to 7 digits in a space of months. So, I think there are a lot of wealth transfer in this downtime if you know where to look. I have been using an FA since 2020, and the least I returned was $140k ROI, and this does not include capital gain.
I really want to get in with a financial advisor this year, especially as all markets are hitting lows. I don't want to be too optimistic and end up losing everything.
I've shuffled through investment-advisers in the past and so far JENIENNE MINITER FAGAN has proved to be the most effective and well grounded, she has quite an audience so you can easily just reach her on the web to gain access to her, just look-the name up
Personally I work with JENIENNE MINITER FAGAN a registered Investment advisor. Quite renowned, search her name to get in touch
STEH I'M CONFUSED, So you collected the premium but the stock you are holding is cratering so you collected $6500 in premium but 300 shares lost about 4500 in value (not exact) so your net is $2000 after 2 months ... doesn't seem like a good deal to me. Please correct me if I am wrong. thanks
Great video. Thank you for sharing!!!
Thanks Sir.
Can you lose more than your initial investment?
or just close your cc at 50% and reload even more often. right.
thank you 🤝
I didn't know one could fulfill assignment of a "synthetically" covered call at 154.60 by selling a deep in the money covered call at 100. While I'd certainly wish to understand how this strategy could go wrong and how best to manage it, it is impressive what leverage can do. I'd really like to know the details of how the entire transaction is settled at the time of selling the in the money 100 call. How exactly does the purchaser of the 154.60 call option get their 100 shares delivered? Is this done by a market maker or the broker? Pretty fascinating.
wow I just do a sell on the %ups after I pick a low delta (
These are very valuable rules for anybody who wants to get rich. Unfortunately, most people who will watch this video will not really be able to apply the principles. We may not want to admit, but as Warren Buffett once said, investing is like any other profession-- it requires a certain level of expertise. No surprise that some people are losing a lot of money in the bear market, while others are making hundreds of thousands in profit. I just don't know how they do it. I have about $109k now to put in the market.
Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money. I know someone who made over $350k in this recession influenced market, but to the best of my knowledge, it was through a financial advisor.
True, A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. $850k so far.
Mind if I ask you to recommend how to reach this particular coach you using their service? Seems you've figured it all out unlike the rest of us.
Cant reveal much info, Catherine Morrison Evans is the shrewd advisor responsible for my portfolio success, it's only right you look her up and confirm yourself.
I just checked her out and I have sent her an email. I hope she gets back to me soon.
The second example of a synthetic covered call loses another 4k profit to close out buying back the 10 March 150 calls at an intrinsic value of $4. That profit is 26k not $30k. Also, buying the July 100 call at the bottom of the range would not be as profitable if FNV was trading at just below 150 instead. That huge profit disappears due to Theta later on and you are not paying 29k but 70k or more.
Step finance makes DeFi feel way less intimidating. Solana gang, you need this in your life.
I know CC ETFs do this all the time so I must be missing something.
- first example, CC sold @ 170 strike for $11.43. APPL then rallies to $180 but if it goes another ~$1.50 higher those calls get assigned. Oops.
No mention of that.
I’ve then pocketed the 11.43 but sold the shares for $170. Now I’m even with what I’d have made just hanging on to the shares which is fine but to continue on with the plan I have to buy the shares back or the whole sequence dies & I also have tax on the full capital gain. Maybe ok if I’m a pure trader I guess but if I’m just adding some points to my yield maybe not so great.
Seems to me at the very least the math is a little wonky.
Why wasn’t your 170 called away, when the stock reached 180 ?
If I remember - the buyer paid $11 premium for the option, he would still lose $1 exercising at 180
True , wish I had done that last October to Dec with TLT!