i just recently started rolling my options. it's really amazing. the last month or two i had a bunch of trades get away from me due to the market turning down. weathered the storm by buying time with rolls, letting things recover, all while putting more premium in my pocket along the way. i'm even strategic about timing the rolls. like, I'm in a bad Intel $40 strike contract. as soon as i saw it turn up a few points on Friday, I immediately rolled it for like $70 per contract credit, when the whole previous week it was hard to even break even on it! now i have another month to let the stock price stabilize and some more cashflow in my pocket. i really wish i'd used this strategy when i first started out trading options 15 months ago. i let too many contracts get put to me or called away in the beginning. now i understand it's a constant process of keep rolling, rolling, rolling until you finally can't. and then buy shares wayyyyy below your target price, or sell shares wayyyyy above your cost-basis. It's a win-win-win-win-win.... haha. live and learn.
Great video! When selling/writing options, if you are willing to be "PATIENT", rolling options is the back up plan that allows you to pretty much always win (take no L's)! No matter if the market is up, down, or sideways:)
"if you are willing to be "PATIENT", Here is a quote by Warren Buffett, "The Stock Market is a device, to transfer money, from the impatient, to the patient." After selling thousands of cash secured puts and covered calls, and ROLLING them until they expired out of the money, I have NEVER had a net loss. I just keep rolling in the money options, for net credits, until they become out of the money, and get PAID, to be patient.
@@thomasd5488 that was i was asking a guy before and he was saying same thing, u just keep rolling and collecting premiums, so theres no limit to how much u can roll?? have u ever been assigned or do u quickly roll when ITM? how far u sell ur puts or calls? weekly, monthly??
@@Eastbaypisces I do get assigned early once in a while. I don't roll as soon as the put or covered call goes in the money. As long as there is EXTRINSIC value in the premium, I wait until the Thursday before expiration to roll an in the money option. When to roll depends on how much of the premium is EXTRINSIC value. A very deep in the money option will have very little EXTRINSIC. If there is less than 10 cents of EXTRINSIC, then it may be time to roll down one strike for puts, up one strike for calls, and out to a far away enough expiration to bring a small net credit. Don't roll out any further than necessary to get a small net credit. When the strike is deep in the money, I consider rolling a repair strategy, not a money making strategy. By rolling down one strike price for puts, and up one strike for calls, you improve your position. With cash covered puts, you lower the cash collateral requirement, which frees up some cash, so you can use that free up cash, to SELL an at the money put, which will have a much lower strike price, AND it gives you a larger premium. When I get assigned early, I sell slightly out of the money, weekly covered calls, for above average premiums. They are way below my break even price, so I monitor them closely, and roll them up one strike at a time, and out far enough to earn a net credit, to avoid assignment. As long as my call strike is below my break even price, I will continue making money by rolling them up one strike at a time, and out just far enough to ear a small net credit. Each time I roll a covered call up one strike, I am gaining back the stock price appreciation that was lost when the stock price tanked. The biggest problem that people have with selling covered calls, is that you cap the upside potential on a rising stock. Rolling up one strike at a time, and out far enough to earn a net credit, alleviates the lose that conventional trading practices teach, when it comes to selling covered calls and letting them get assigned. Hope this helps.
@@thomasd5488 yea see i do well have been doing weekly cc so theres not much extrinsic value so if i see its getting close TTM i roll, im just beginning at this tho, just trying to learn and get advice on what ppl do , thx for long response, yea i monitor mine closely too....
Dear coach , another fantastic video ..... My basic question is at 9:51 example of LYB july 15 2022 84$ ........ My first question is : I was under impression that if the stock price in this case (83.16 $ ) drops below the strike price ( 84 ) before expiration date , you WILL be assigned "AUTOMATICALLY " BY BROKAGE FIRM and you have to own the stock and "close to buy" , BUT it seems I was wrong because in this case you just simply rolled out and in your first option /scenario ( 11:12 ) ( and you EVEN kept strike price at THE SAME STRIKE PRICE ( 84 $) and you just simply moved the expiration down to AUG / 19/2022) .... Wow , wow wow , , I did NOT know that you can do that, I thought you would be assigned automatically because your NEW "strike price" is Above current price of market .I always thought in selling PUT your strike price MUST be always ** below** current stock price .....wow ..... BUT , in second option( scenario ) ( 11:57 ) , you brought down the strike price from ( 84 ----> 79.8 ) to be more defensive ( that made more sense to me ) and then i actual reality you went to even LOWER (84.8 ---> 74.8 ) ...... wow that was an amazing learning case ...LOVE your teach ing style
Yes. Prior to expiration, you can buy to close the old contract and sell to open a new contract. By adding time until expiration, you can often roll for a credit between the cost to close and premium you collect for the new option. However, it will not always work. As the option gets deeper in the money, the roll becomes more difficult to collect a credit.
Hi J R. If you BUY an option, you have 2 choices. Sell it or exercise it. Options that are SOLD are typically worth more vs exercising so it is a better choice. A sold option includes time value while exercising ignores the time value and follows the instructions in the contract (Assign at xxx strike price).
So I'm learning a lot from your videos, and I wanted to ask you, if you're selling puts and the stock drops below the strike price, how common is it to have the stock put to you before the expiration date arrives?
It is not that common but the deeper ITM the more likely and a dividend ex-date can trigger assignment on a call. Occasionally I wake up Saturday morning and get that surprise assignment email. Rolling out and adding time value (extrinsic value) will decrease the chances.
Good stuff Dave...definitely part of the fun with CC's. Interesting though making that decision to roll or not, I guess it depends on your strategy with the underlying stock. For me, I've had 100 sh of AAPL now for awhile @ $115...selling premium on it for some time, it's like a little atm machine. But I recently was challenged with my strike, price went above...I'm like really? So as with your Kinder Morgan, same with me with AAPL, don't want to let them go. It's funny, you think you might want to do a CC and pick a strike you'd be happy with, then it blows through and the mindset changes. I've learned also that sometimes you just have to let a stock run...👍
Hey! Yes. I've been there on a few stocks. They take off and you miss out on some gains. With my options account, I set my goals and live with this situation. With my long term account, I also have plenty of situations where I wish I had sold that CC! It gives me some balance.
Most people make the mistake of rolling an in the money covered call, all the way up to a strike that is out of the money. This causes you to have to roll out to a much farther expiration date, to earn a net credit. No need to be afraid of rolling up just one strike price at a time, and out far enough to earn a net credit. The strike will still be in the money, but you have gained a better position by rolling up one strike price, and got PAID to do it. Keep rolling up one strike at a time, as the current expiration date is near. This is really helpful when you own a dividend stock, and want to collect the dividend. If the stock price takes a breather for a few weeks, few months, you may be able to let the covered call expire out of the money, to keep the shares, and sell another OTM covered call, or let the shares get called away, near the top, for maximum gains. Keep track of the EXTRINSIC value of the premium, as the expiration date gets closer. As long as there is still some time (EXTRINSIC) value in the premium, it is not likely to be exercised early. The owner of the long call will make more money by selling the in the money call, than exercising early, and losing the extrinsic value, because of exercising early. Having a good covered call selling strategy, does not prevent you from choosing a stock that ends up rising far above your strike price. Having a good covered call ROLLING strategy, can help you capture the upside potential on stocks that rise far above your strike price. Knowledge IS power, ONLY if you apply that knowledge.
I have NVDA cost basis $180 with a option sell call $260 expire 6/2024.. current at $395 today. It's there away to roll option to keep from call away .
Hi. You can roll just about anything but wide spreads can make it more difficult. I typically set a limit just below the midpoint of the roll to give the market maker some room and adjust down as needed. Often, just below the overall midpoint, will still get quickly executed.
Hey Dave. No. I still try and wait it out in most situations till I'm near expiration. I still have that one call option on GOOG (now 20) and I treat that a little more "actively" but overall I try to wear my patience pants.😊👍
I just got caught with TSLA, sold covered calls with a strike $240 expiring today and the stock is to $267. I’m going to try to roll it out but almost every option ends up in a new debit
You likely took in some nice credit on the initial trade. If you roll for a debit but add the initial premium collected, can you get near breakeven overall at a decent strike? I assume you want to keep the stock, but if not, you can also start over and sell a put.
@@wealthadventures Thank you! I did exactly that and glad to have kept the stock. It is nice to know that even if things get pretty bad, there is always a way to improve or eliminate the situation. I love options!
Hey Rufus. I get what you are saying but in this case I'm referring to the individual sold call so it should just be strike price plus the premium. Since I received $100 in premium, if the shares were called away at expiration and the price was $106, I would make $500 on the stock for selling at $105 plus $100 on the premium I collected. I could immediately buy the 100 shares back at $106 and be even. If the stock was at $105.5 at expiration and the shares got called away, I could buy it back and I would have an extra $50 in premium. At $107, I could buy the shares back but it would cost me an extra $100.
@@wealthadventures Sounds good. However, if my shares were called away at 105, and I really wanted them back, I wouldn't just buy them back...I'd sell a CSP at the 105 strike price and collect that sweeeeeet premium. Win, win, win situation.
Hey Jerome. For straight dividend ETFs, I currently hold VYM, SCHD, SPYD, and HDV. VYM is my largest position in this group by far. SCHD is the one I get asked about the most. I also own some JEPI and NUSI but I would call those income ETFs.
@@wealthadventures súper!!! Dave, I am really appreciating your content and style. I have recently retired, never really managed my money. Have consolidated all my cash and have been out of the market the last 8 months. My real estate cash flow pays all the bills. I’ve been deep into learning the IBD methods and your approach. I am sensing that it is time to enter the market. Exciting Times for sure!!!!! Thanks. Looking forward to your next revelations.
@@jeromebeauchamp9822 Sounds like you missed all the fun of the last 8 months! That is great! I'm still not in a rush to get more in the market but have enough active. I also have some real estate and think that is a great way to balance out a portfolio. Good luck and thanks for following along!
Hey Jevon. I do not at this time but I'm happy to answer any questions. Just ask here or shoot me an email. If something changes, I will post something. Thanks for watching!
i just recently started rolling my options. it's really amazing. the last month or two i had a bunch of trades get away from me due to the market turning down. weathered the storm by buying time with rolls, letting things recover, all while putting more premium in my pocket along the way. i'm even strategic about timing the rolls. like, I'm in a bad Intel $40 strike contract. as soon as i saw it turn up a few points on Friday, I immediately rolled it for like $70 per contract credit, when the whole previous week it was hard to even break even on it! now i have another month to let the stock price stabilize and some more cashflow in my pocket. i really wish i'd used this strategy when i first started out trading options 15 months ago. i let too many contracts get put to me or called away in the beginning. now i understand it's a constant process of keep rolling, rolling, rolling until you finally can't. and then buy shares wayyyyy below your target price, or sell shares wayyyyy above your cost-basis. It's a win-win-win-win-win.... haha. live and learn.
Hey! Glad it is working out for you. This market has been tough but I must say that selling calls rather aggressively has worked well recently.
yup , i just figured this out not too long ago, glad i did my research on this stuff first
Great video! When selling/writing options, if you are willing to be "PATIENT", rolling options is the back up plan that allows you to pretty much always win (take no L's)! No matter if the market is up, down, or sideways:)
Thanks! Patience is definitely a must. Still learning that at times! Ha.
"if you are willing to be "PATIENT",
Here is a quote by Warren Buffett,
"The Stock Market is a device, to transfer money, from the impatient, to the patient."
After selling thousands of cash secured puts and covered calls, and ROLLING them until they expired out of the money, I have NEVER had a net loss.
I just keep rolling in the money options, for net credits, until they become out of the money, and get PAID, to be patient.
@@thomasd5488 that was i was asking a guy before and he was saying same thing, u just keep rolling and collecting premiums, so theres no limit to how much u can roll?? have u ever been assigned or do u quickly roll when ITM? how far u sell ur puts or calls? weekly, monthly??
@@Eastbaypisces I do get assigned early once in a while. I don't roll as soon as the put or covered call goes in the money. As long as there is EXTRINSIC value in the premium, I wait until the Thursday before expiration to roll an in the money option. When to roll depends on how much of the premium is EXTRINSIC value. A very deep in the money option will have very little EXTRINSIC. If there is less than 10 cents of EXTRINSIC, then it may be time to roll down one strike for puts, up one strike for calls, and out to a far away enough expiration to bring a small net credit.
Don't roll out any further than necessary to get a small net credit.
When the strike is deep in the money, I consider rolling a repair strategy, not a money making strategy. By rolling down one strike price for puts, and up one strike for calls, you improve your position. With cash covered puts, you lower the cash collateral requirement, which frees up some cash, so you can use that free up cash, to SELL an at the money put, which will have a much lower strike price, AND it gives you a larger premium.
When I get assigned early, I sell slightly out of the money, weekly covered calls, for above average premiums. They are way below my break even price, so I monitor them closely, and roll them up one strike at a time, and out far enough to earn a net credit, to avoid assignment.
As long as my call strike is below my break even price, I will continue making money by rolling them up one strike at a time, and out just far enough to ear a small net credit.
Each time I roll a covered call up one strike, I am gaining back the stock price appreciation that was lost when the stock price tanked.
The biggest problem that people have with selling covered calls, is that you cap the upside potential on a rising stock.
Rolling up one strike at a time, and out far enough to earn a net credit, alleviates the lose that conventional trading practices teach, when it comes to selling covered calls and letting them get assigned.
Hope this helps.
@@thomasd5488 yea see i do well have been doing weekly cc so theres not much extrinsic value so if i see its getting close TTM i roll, im just beginning at this tho, just trying to learn and get advice on what ppl do , thx for long response, yea i monitor mine closely too....
Thanks for great example. The Net Credit stuff confused me on fidelity a bit but seeing your example made all the difference. First rolled CC done.
Hey Doug. Nice! Glad it helped. Any questions, just ask and thanks for watching.
Dear coach , another fantastic video ..... My basic question is at 9:51 example of LYB july 15 2022 84$ ........ My first question is : I was under impression that if the stock price in this case (83.16 $ ) drops below the strike price ( 84 ) before expiration date , you WILL be assigned "AUTOMATICALLY " BY BROKAGE FIRM and you have to own the stock and "close to buy" , BUT it seems I was wrong because in this case you just simply rolled out and in your first option /scenario ( 11:12 ) ( and you EVEN kept strike price at THE SAME STRIKE PRICE ( 84 $) and you just simply moved the expiration down to AUG / 19/2022) .... Wow , wow wow , , I did NOT know that you can do that, I thought you would be assigned automatically because your NEW "strike price" is Above current price of market .I always thought in selling PUT your strike price MUST be always ** below** current stock price .....wow ..... BUT , in second option( scenario ) ( 11:57 ) , you brought down the strike price from ( 84 ----> 79.8 ) to be more defensive ( that made more sense to me ) and then i actual reality you went to even LOWER (84.8 ---> 74.8 ) ...... wow that was an amazing learning case ...LOVE your teach ing style
Yes. Prior to expiration, you can buy to close the old contract and sell to open a new contract. By adding time until expiration, you can often roll for a credit between the cost to close and premium you collect for the new option. However, it will not always work. As the option gets deeper in the money, the roll becomes more difficult to collect a credit.
@@wealthadventures Thnak you so much for sharing your incredible knowledge . greatly appreciated
Thank you so much for your videos!!!
You are welcome Sandy! Thanks for watching!
Thank you for the video, I wanted to ask about any margin money required by the broker when you are writing calls against the stocks you own.
Hi. There should not be a margin requirement for selling calls if you own the shares you are selling against.
Thank you ! just discovered your channel and it is awesome ! Loving it!
Hi Dave, you mention that usually assignment normally doesn't happen until expiration even though early assignment possible. Can you explain why?
Hi J R. If you BUY an option, you have 2 choices. Sell it or exercise it. Options that are SOLD are typically worth more vs exercising so it is a better choice. A sold option includes time value while exercising ignores the time value and follows the instructions in the contract (Assign at xxx strike price).
So I'm learning a lot from your videos, and I wanted to ask you, if you're selling puts and the stock drops below the strike price, how common is it to have the stock put to you before the expiration date arrives?
It is not that common but the deeper ITM the more likely and a dividend ex-date can trigger assignment on a call. Occasionally I wake up Saturday morning and get that surprise assignment email. Rolling out and adding time value (extrinsic value) will decrease the chances.
@Wealth Adventures great to know, thank you.
Good stuff Dave...definitely part of the fun with CC's. Interesting though making that decision to roll or not, I guess it depends on your strategy with the underlying stock. For me, I've had 100 sh of AAPL now for awhile @ $115...selling premium on it for some time, it's like a little atm machine. But I recently was challenged with my strike, price went above...I'm like really? So as with your Kinder Morgan, same with me with AAPL, don't want to let them go. It's funny, you think you might want to do a CC and pick a strike you'd be happy with, then it blows through and the mindset changes. I've learned also that sometimes you just have to let a stock run...👍
Hey! Yes. I've been there on a few stocks. They take off and you miss out on some gains. With my options account, I set my goals and live with this situation. With my long term account, I also have plenty of situations where I wish I had sold that CC! It gives me some balance.
Most people make the mistake of rolling an in the money covered call, all the way up to a strike that is out of the money. This causes you to have to roll out to a much farther expiration date, to earn a net credit.
No need to be afraid of rolling up just one strike price at a time, and out far enough to earn a net credit.
The strike will still be in the money, but you have gained a better position by rolling up one strike price, and got PAID to do it.
Keep rolling up one strike at a time, as the current expiration date is near. This is really helpful when you own a dividend stock, and want to collect the dividend.
If the stock price takes a breather for a few weeks, few months, you may be able to let the covered call expire out of the money, to keep the shares, and sell another OTM covered call, or let the shares get called away, near the top, for maximum gains.
Keep track of the EXTRINSIC value of the premium, as the expiration date gets closer.
As long as there is still some time (EXTRINSIC) value in the premium, it is not likely to be exercised early.
The owner of the long call will make more money by selling the in the money call, than exercising early, and losing the extrinsic value, because of exercising early.
Having a good covered call selling strategy, does not prevent you from choosing a stock that ends up rising far above your strike price.
Having a good covered call ROLLING strategy, can help you capture the upside potential on stocks that rise far above your strike price.
Knowledge IS power, ONLY if you apply that knowledge.
Great breakdown!
Thanks! 👍
Loving your videos!
Thanks Daniel! Appreciate you watching.
I have NVDA cost basis $180 with a option sell call $260 expire 6/2024.. current at $395 today. It's there away to roll option to keep from call away .
Hi. Tough position. Hard to roll that with expiry so far in the future. You could look at rolling for a loss to re-position the strike.
@Wealth Adventures I tried doing that, but the loss was 2x the premium I got initially.
Does this only work when bid/ask spreads are tight? Have you ever made it work with wide spreads or do you steer clear of those?
Hi. You can roll just about anything but wide spreads can make it more difficult. I typically set a limit just below the midpoint of the roll to give the market maker some room and adjust down as needed. Often, just below the overall midpoint, will still get quickly executed.
Dr. Dave.. Do you always roll as soon as the short strike has been breached ?
Hey Dave. No. I still try and wait it out in most situations till I'm near expiration. I still have that one call option on GOOG (now 20) and I treat that a little more "actively" but overall I try to wear my patience pants.😊👍
@@wealthadventures - Awesome
I just got caught with TSLA, sold covered calls with a strike $240 expiring today and the stock is to $267. I’m going to try to roll it out but almost every option ends up in a new debit
You likely took in some nice credit on the initial trade. If you roll for a debit but add the initial premium collected, can you get near breakeven overall at a decent strike? I assume you want to keep the stock, but if not, you can also start over and sell a put.
@@wealthadventures Thank you! I did exactly that and glad to have kept the stock. It is nice to know that even if things get pretty bad, there is always a way to improve or eliminate the situation. I love options!
@1:50....$106 is the breakeven for the buyer, not us, we are the seller.
Hey Rufus. I get what you are saying but in this case I'm referring to the individual sold call so it should just be strike price plus the premium. Since I received $100 in premium, if the shares were called away at expiration and the price was $106, I would make $500 on the stock for selling at $105 plus $100 on the premium I collected. I could immediately buy the 100 shares back at $106 and be even. If the stock was at $105.5 at expiration and the shares got called away, I could buy it back and I would have an extra $50 in premium. At $107, I could buy the shares back but it would cost me an extra $100.
@@wealthadventures Sounds good. However, if my shares were called away at 105, and I really wanted them back, I wouldn't just buy them back...I'd sell a CSP at the 105 strike price and collect that sweeeeeet premium. Win, win, win situation.
@@wealthadventures Love your videos, by the way. Keep doing what you're doing! 👌
@@rufuseverette5788 Right! It's a hot potato market. Just toss it back.
Dave, what are you preferred Dividend focused Funds?
Hey Jerome. For straight dividend ETFs, I currently hold VYM, SCHD, SPYD, and HDV. VYM is my largest position in this group by far. SCHD is the one I get asked about the most. I also own some JEPI and NUSI but I would call those income ETFs.
@@wealthadventures súper!!! Dave, I am really appreciating your content and style. I have recently retired, never really managed my money. Have consolidated all my cash and have been out of the market the last 8 months. My real estate cash flow pays all the bills. I’ve been deep into learning the IBD methods and your approach. I am sensing that it is time to enter the market. Exciting Times for sure!!!!! Thanks. Looking forward to your next revelations.
@@jeromebeauchamp9822 Sounds like you missed all the fun of the last 8 months! That is great! I'm still not in a rush to get more in the market but have enough active. I also have some real estate and think that is a great way to balance out a portfolio. Good luck and thanks for following along!
@@wealthadventures what are income ETFs tho??
@@Eastbaypisces A category that includes these covered call ETFs that we have been talking about like JEPI and DIVO.
Hey man do you offer 1-1 coaching?
Hey Jevon. I do not at this time but I'm happy to answer any questions. Just ask here or shoot me an email. If something changes, I will post something. Thanks for watching!
In 2022 market conditions, I have only had to roll 10% of my covered calls.
Hey Kurt. I believe it! I've been selling closer to the money of late and it has been paying off.
😒 【p】【r】【o】【m】【o】【s】【m】