That's a great question! For covered calls, the losses are unlimited because technically a stock can rise an unlimited amount, i.e. "Tesla can have a stock price of infinity". So if you have a strike price of $200 and Tesla goes to $250, you "lose" $50 for each share. Having said that, you don't really lose anything if it's above your cost basis and you're fine with selling at the strike price (i.e. Tesla at $200). I'll try to make a video on it : ) Thank you for watching!
Great question! I don’t believe Fidelity shows the requirements when opening the contract BUT if you go to Active Trader Pro in Fidelity, go to the Option Summary and scroll all the way to the right, it will say Margin Requirements and will let you know how much collateral is needed for each option contract. Lmk if you have other questions!
Excellent quick video.... Would you be able to do a video on selling g Covered Calls for beginners....Amazingly there is not an excellent video out there that covers everything.... I am trying to learn the basics in an effort to gather premiums to help boost up my dividend portfolio. I enjoy your content and your teaching. I'm a new sub... ThanX for your hard work and efforts....
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It said the potential losses are unlimited. Can you please explain this?
That's a great question! For covered calls, the losses are unlimited because technically a stock can rise an unlimited amount, i.e. "Tesla can have a stock price of infinity". So if you have a strike price of $200 and Tesla goes to $250, you "lose" $50 for each share. Having said that, you don't really lose anything if it's above your cost basis and you're fine with selling at the strike price (i.e. Tesla at $200). I'll try to make a video on it : ) Thank you for watching!
Does Fidelity show you the margin requirements when selling naked puts? Thx
Great question! I don’t believe Fidelity shows the requirements when opening the contract BUT if you go to Active Trader Pro in Fidelity, go to the Option Summary and scroll all the way to the right, it will say Margin Requirements and will let you know how much collateral is needed for each option contract. Lmk if you have other questions!
What do u do after the last step? Just wait for it to expire or do u have to close it?
I would just wait for it to expire. You could also "roll the option" but that's a more advance technique. I'll try to cover that.
So, just to be clear: If the stock price does NOT hit the strike price, do you need to do anything? Do you automatically keep your shares?
Can you do this on the app or do you have to do this from the website?
Excellent quick video.... Would you be able to do a video on selling g Covered Calls for beginners....Amazingly there is not an excellent video out there that covers everything.... I am trying to learn the basics in an effort to gather premiums to help boost up my dividend portfolio. I enjoy your content and your teaching. I'm a new sub... ThanX for your hard work and efforts....
awww love you thank you so much! Will try to make an in depth video!
Thanks for keeping it quick & short.
Always!
how come i dont see option trade builder? T.T
woo thaks this help me alot
Absolutely!