I also like to recommend to try and pick 4-5 stocks that are not correlated to each other. That way you have variety in outcome on your options. It’s nice to have some stocks that go up or down somewhat Independent of each other. I like to utilize commodities to achieve this like oil, nat gas, gold…
I would say to avoid small caps, mid caps, if you can. I'm only interested in solid financials and not "hope and a prayer." Constantly altering or trying to shave off stocks in my watchlist, to where I'm pretty Certain, I'd not worry about being assigned. NVDA splitting is a welcomed sight. Wish others would do the same. Of course premiums will be lower per contract, but now it's like we're not required to do the equivalent of 10 contracts on NVDA. AVGO should split. BKNG. MELI. Of course, the institutions don't care about $3000 stocks.
Jim, Great content as usual. I constantly remind myself that a 20-30 delta covered call being called away is often the ideal outcome. I think this is true especially with high beta stocks having expensive PE or P/FCF metrics.
I don't defend my covered calls when they go in the money. I look for 1 percent premium per month with 5 % per month out of the money. I had 200 shares called away last month and if the price drops back down soon I'll buy again. Plus I invest in dividend paying companies. Triple income from dividend, stock appreciation, and dividends is the way to go. 20 to 30 delta is my sweet spot.
Really great description and visual of the CC "chaining'. Thank you! I notice, though I might have miscounted, that you haven't used all of your KO shares for selling CC. Is there a strategy reason for that? Thanks!
Delta is not a probability....It only measures the distance from the stock price. Nothing about the delta calculates probability of any occurrence. For your more active members selling shorter duration options and then selling again and again provides greater percentage returns than selling once for longer duration. Selling shorter duration options also reduces risk as they cover a shorter period. You might talk at some point about realistic expected returns from a portfolio perspective using your techniques. Thanks for your video.
That’s true delta by definition for options does NOT mean probability. But it in effect can act in that way….lower the delta the lower probability the stock gets to that price by expiration giving the current volatility…etc. certainly news or market changes can blow up the probabilities very quickly
I do 30 and 20 delta options usually so I still view it as “probability” and treat it like that even though I’m not sure that’s the true definition. But I agree with how you view delta from trade perspective and strategy
If you sell an at the money CC and then the stock goes up and you choose to buy to close, is the BTC amount usually about the same as the increase in the value of your shares?
If you are referring to the Yieldmax then I no longer invest in them. Lost too much value in the stock. I was only invited in TSLY. Other members reported similar results.
Im practicing covered calls in TOS. Why does it show Net Liq in ( ) for the that option line? In the paper money account i did buy 100 shares of the underlying stock i was written the CC. That would be negative correct?
Jim, This all sounds so easy to make money but I have found it's not (because I haven't been using stop losses). I am primarily a real estate investor and have no experience trading options. I don't really care to hold stocks and I would think that selling ITM calls would be an easy way to make money. For example, Dell is selling at $134.50. I can buy 100 shares for $13,450 and sell the June 14 $134 (slightly ITM) call for $4.75. I collect the $475 premium and set a stop loss on the stock for $129.75. So, at worse, I break if the stock goes down. If it goes up, it gets called away at $134 and I keep the $475 premium. Is there something wrong with this strategy? Thanks Andy
Thanks for sharing. No right or wrong. I like what you are doing. If it is working for you then keep going. I constantly try to improve on how I do it. I'm also into real estate. Just purchased six acres on Monday. Going to develop the land and a Barndominium on it.
I also like to recommend to try and pick 4-5 stocks that are not correlated to each other. That way you have variety in outcome on your options. It’s nice to have some stocks that go up or down somewhat Independent of each other. I like to utilize commodities to achieve this like oil, nat gas, gold…
Thanks for sharing!
I would say to avoid small caps, mid caps, if you can. I'm only interested in solid financials and not "hope and a prayer." Constantly altering or trying to shave off stocks in my watchlist, to where I'm pretty Certain, I'd not worry about being assigned. NVDA splitting is a welcomed sight. Wish others would do the same. Of course premiums will be lower per contract, but now it's like we're not required to do the equivalent of 10 contracts on NVDA. AVGO should split. BKNG. MELI. Of course, the institutions don't care about $3000 stocks.
Can we pick just SPY, QQQ and IWM instead of relying on stocks ?
Jim,
Great content as usual. I constantly remind myself that a 20-30 delta covered call being called away is often the ideal outcome. I think this is true especially with high beta stocks having expensive PE or P/FCF metrics.
I agree. This is even more true in retirement accounts.
I don't defend my covered calls when they go in the money. I look for 1 percent premium per month with 5 % per month out of the money. I had 200 shares called away last month and if the price drops back down soon I'll buy again. Plus I invest in dividend paying companies. Triple income from dividend, stock appreciation, and dividends is the way to go. 20 to 30 delta is my sweet spot.
Thanks for sharing. Similar strategies.
Great video…no ads-thank you!
Thanks for watching!
Been doing the wheel syrategy for awhile.With your inspiration did my first put credit spread.Not many contracts see how it goes.
Starting small is the way to go when starting. It takes the pressure off and allows time to correct issues as well.
Thanks for sharing.
Ancestors, that was funny Jim.
Thanks. A bit of a brain fart.
Hahaha😂😂😂😂😂😂
Sold a 0 DTE put credit spread today for $224. If I could do that successfully 3 times a week I’d be great!
Nice. What stock or ETF?
The SPY. I like that they have 0DTEs everyday. I’m going to try it again this morning.
Nice video Jim, thanks!
Glad you enjoyed it
Really great description and visual of the CC "chaining'. Thank you! I notice, though I might have miscounted, that you haven't used all of your KO shares for selling CC. Is there a strategy reason for that? Thanks!
Holding back some for a jump in the market. Might sell a few this week.
Delta is not a probability....It only measures the distance from the stock price. Nothing about the delta calculates probability of any occurrence.
For your more active members selling shorter duration options and then selling again and again provides greater percentage returns than selling once for longer duration. Selling shorter duration options also reduces risk as they cover a shorter period.
You might talk at some point about realistic expected returns from a portfolio perspective using your techniques.
Thanks for your video.
That’s true delta by definition for options does NOT mean probability. But it in effect can act in that way….lower the delta the lower probability the stock gets to that price by expiration giving the current volatility…etc. certainly news or market changes can blow up the probabilities very quickly
Don't agree about your comment about probability. Also, an argument can be made that shorter duration is riskier.
I do 30 and 20 delta options usually so I still view it as “probability” and treat it like that even though I’m not sure that’s the true definition. But I agree with how you view delta from trade perspective and strategy
If you sell an at the money CC and then the stock goes up and you choose to buy to close, is the BTC amount usually about the same as the increase in the value of your shares?
It all depends. How far are you away from expiration. It also depends on the stock in question and how volatile it is. No easy answers.
What do you think about high yield ETFs?
If you are referring to the Yieldmax then I no longer invest in them. Lost too much value in the stock. I was only invited in TSLY. Other members reported similar results.
Im practicing covered calls in TOS. Why does it show Net Liq in ( ) for the that option line? In the paper money account i did buy 100 shares of the underlying stock i was written the CC. That would be negative correct?
I'm not experienced in TOS. When you sell a covered call it shows as a negative. If you buy one then a positive one.
First comment 🎉
Second comment 😊
Jim, This all sounds so easy to make money but I have found it's not (because I haven't been using stop losses). I am primarily a real estate investor and have no experience trading options. I don't really care to hold stocks and I would think that selling ITM calls would be an easy way to make money. For example, Dell is selling at $134.50. I can buy 100 shares for $13,450 and sell the June 14 $134 (slightly ITM) call for $4.75. I collect the $475 premium and set a stop loss on the stock for $129.75. So, at worse, I break if the stock goes down. If it goes up, it gets called away at $134 and I keep the $475 premium. Is there something wrong with this strategy? Thanks Andy
Thanks for sharing. No right or wrong. I like what you are doing. If it is working for you then keep going. I constantly try to improve on how I do it. I'm also into real estate. Just purchased six acres on Monday. Going to develop the land and a Barndominium on it.
Thanks for your reply. Good luck on developing the barndominium.