⚠️ The Risks Of Selling Covered Calls - Do This Instead & Maximize Premiums
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- Опубліковано 18 чер 2024
- Are you considering selling covered calls to earn income from your stock investments but wonder about the risks? Join Rick, a Wall Street Journal best-selling author with over 20 years of experience in trading stocks and options, as he explores the potential risks and strategies of covered call writing. Despite its popularity among investors, this strategy is not without its pitfalls.
In this video, Rick explains:
✅ What covered calls are and how they work using real-life examples and current market scenarios.
✅ The major risks of selling covered calls include opportunity loss and assignment risk.
✅ Tax implications that can affect your earnings from covered calls.
✅ Practical tips on mitigating the risks of covered calls, including using option Greeks like Delta.
✅ Alternatives to direct covered call writing include investing in covered call ETFs
🔍 Whether you're new to options trading or looking to refine your strategy, this video has insights and tips to help you make informed decisions. Don't forget that while covered calls can be a lucrative strategy, understanding the risks is crucial to managing your investments effectively.
👍 Like this video if you find it informative, and subscribe for more insights on stock and options trading. Have questions or want to share your experience with covered calls? Comment below-let's start a conversation!
🔔 Stay tuned for more expert financial advice and ensure you're equipped to maximize your investment returns while minimizing risks.
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📈 More on Covered Calls: rickorford.com/selling-covere...
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Skip ahead:
00:00 - Start
01:50 - Introduction
02:48 - Covered Calls Explained
05:42 - What Is Assignment?
08:23 - Opportunity loss.
11:12 - Tax implications
14:01 - How To Mitigate Covered Call Risks
17:42 - Use An Option Screener To Improve Your Chances
21:24 - What if I want to be invested in covered calls, without trading options?
23:16 - Conclusions
DISCLAIMER: This video is for educational purposes only and not financial advice. Always do your own research and consult with a financial advisor before making any investment decisions. All information and data on this UA-cam Channel is solely for entertainment purposes. I'm not a financial advisor, nor licensed in any way to provide any financial advice. The information herein is based solely on my personal opinion and experience. All investments hold inherent risk, and the information provided on this UA-cam Channel should not be interpreted as any kind of guidance, recommendation, offer, advice, or suggestion. Any ideas and strategies discussed on this channel should not be implemented without first considering your financial and personal circumstances or without consulting a financial professional.
🔥 Join me on Discord: rickorford.com/discord
There use to be a thing called "married position" does anyone know if that still applies to a stock in a married position is disqualified for long term capital gains for that time?
One problem the video totally failed to mention is not all stocks are suitable for selling covered calls. Before picking a stock you want to sell covered calls on, look at the option chain, specifically the volume and open interest. If both are low to zero, you aren't going to sell any nor be able to roll or buy to close. In this case, pick another stock. In general, the more popular the stock is, the better the market. Also applies to puts.
I've found as a rule-of-thumb, if there are weekly options, there is enough of a market. If monthly only, the market for options ranges from thin to non-existent.
Good point- if there’s weekly’s, there’ll probably be more liquidity! Will keep that in mind in the future.
Main risk in Covered calls is not stock going up but tanking, fa far more than the CC premium received
You can hedge with a put or if you're long on that stock, it doesn't matter what happens in the short term. You're holding long anyway.
But yes, if you're doing CC on random stocks and chasing premiums, that can be one way you can get burned.
I do CC on my kids dividend positions, I am holding super long anyways so it's a good strategy for me.
I like JEPQ more than JEPI. They are very similar but JEPQ writes their covered calls 5-10% out of the money. In this scenario you get a little upside appreciation should the underlying go up in value. JEPI I believe would lose less in a bear market but you take the risk with the rewards. JEPQ typically pays out about 1-2% more in dividends, per month, than JEPI. Of course this is dependent on both the dividend payout as well as the price of the ETF itself. I've owned them both and would continue to buy either. They are both excellent, IMO.
Absolutely correct!
Thank you Rick
You're a really good teacher
Learned a bunch
David
Very kind of you to say, thanks!
Covered calls are also tricky on taxes.
If you sell a covered call for less than 30 days duration your holding period resets if you were short term.
So if you had a stock for 11 months and wrote a 2 week covered call your holding clock would reset back to 0.
If you sell an ITM call, the duration doesn’t count towards your holding period to qualify for long term capital gains or the holding period for a qualified dividend.
So if you bought a stock in January for 30 and you’re sitting at December at 50 and are worried about the stock going down and you want to take profits but you don’t want to pay the short term tax rate you can’t sell a February Call at 40 to get you there since your holding period would be suspended for the duration of the call since you wrote it ITM.
100%! I mentioned it :)
THANK YOU for clarifying; i was unclear
At first I thought another video bash on CCall. But you sir is a good teacher. I really enjoyed this video.
Thanks for the kind words!
5:55 why would the buyer NOT choose to exercise?
Forgot to say: thank you for the videos 😊. Good stuff. Keep up the good work
Thanks! I really do appreciate it ;)
Thanks for the video! I’ve been selling CC for years now and there are so many ways to manage these even if ITM or even after being assigned. Also instead of using CC as income I have been using them to compound shares or LEAPS, do you know of anyone also doing this? Maybe another channel, I posted some videos and so far noone have said they are doing the same. I wonder if others have the same idea.
I did a leaps video a while ago- might need a refresher. Thanks for the suggestion!
Can you please cover the real scenarios where you can actually lose money selling covered calls?
1. The stock goes above the strike price at or before expiration. Is your opinion to let us get assigned or to roll? Because the only real way to avoid a loss here is to let it get assign and then re-buy the shares to do the CC strategy again. If you roll, you are losing money, which is what I face more often than I like. I would like to pick a strike price further out of the money, but the spread is nearly worthless so it's like a no win scenario.
2. The stock is trading lower than when you bought it and the strike prices are lower than your purchase price of the underlying stock. If scenario 1 from above occurs and you get assigned, you're losing money. Whether you let yourself get assigned or roll, you're losing money. What is the best thing to do here?
It kind of sounds like your strategy with CC is not to hold a particular stock indefinitely like dividend investors would, but to use this options samurai tool to pick a stock for the duration of the CC and if it gets assigned let it go and start over with a new stock. Is that right?
The only way you'll lose money in a covered call trade is if the stock moves lower than the breakeven point - but even then, it's a paper loss. It's not crystallized until you hit the sell button.
@@RickOrford Here's how you lose money in a covered strategy:
Week 1: You buy 100 shares of MSFT at 420, and sell a call with strike price of 421 (just out of the money), premium is 3.21 per share ($321 total) expiration is at of week. End of week comes and price closes at 420.5, so option expires worthless. We keep the stock and the premium.
Week 2. Monday trading opens with MSFT price at 413 (bad news over the weekend, stock opens much lower). We do the covered call strategy again. We sell a call at strike price of 414, premium is 1.75 per share ($175 total), expiration is end of week. The week ends and the price is now 415, passing the strike price and we get assigned. Our 100 shares of MST that we originally bought at $420 now sell for $414, ( $41,400 - $42,000 = -$600). Our premiums gave us $321 + $175 = $495, but we still are at a net loss ($495 - $600 = -$105).
We didn't sell (intentionally), we didn't roll, yet we still lost money.
@@RickOrford Why was my response deleted? Your website actually describes the same scenario I did on how you can lose money with a covered call.
What are your thoughts on SVOL? I’ve used it over the years for income, but sell it when IV is low and then buy again when IV is higher. I prefer credit spreads and try to keep a delta of 20 on the short leg
TBH, I never heard of SVOL, but it looks interesting, thank you!
As for selling spreads with a 20 delta, you’ll get less premium, but at the same time, wont likely face a trade that goes offside- at least not often.
Thanks for the tip and for watching!!
SVOL is one of my favorite income ETFs.
How would the returns of a "DIY" monthly/Delta20 CC strategy, compare with a CC Fund such as JEPI/JEPQ? Thank you..
That's tough to answer - The returns on a 20 Delta CC would depend on the underlying security, strike, days to expiration, and volatility!
Great video... thanks for explaining the process in detail
Happy to help! Have you made any trades?
You are such a great professor, I have no knowledge about options at all, after watching other option traders’ videos all day, your video made me understanding better and relaxing, thank you again.
Thanks kindly!!! Did you by chance join my discord??
Can you sell the call spread instead of covered call and manage it manually? If short leg is breached, the long leg profits while rolling out the short leg up and out .
You certainly could!
Hey 😊 What if you own less than 100 shares? Can you still do options? Calls or puts?
A equities option is based on 100 shares. You can sell a call/put with less than 100 shares, however, it’ll be partially secured by $$. Be sure you know what you’re doing!!!
In the NVDA example, how do you come up with 27.80 per share premium? I see .67 per share premium at that strike or 67.00 dollars per contract. The remaining difference of 180.00 per share NAV appreciation at assignment.
$27.80 was an example at the $880 strike earlier this week!
@@RickOrford yes sorry I saw that after I checked the correct monthly. Thanks for the info - I really appreciate it!
@steveb.7120 happy to help- do let me know if you have more questions and maybe I’ll Make a video about it. Thanks again for watching :-)
Thank you so much !
Thank you for watching! What was your biggest takeaway?
I would like to point out something. Typically assignment doesn't happen unless the stock price + premium received is reached or surpassed. In the Nividia example of NVDA strike of $860 and the premium received of $46.70 that means that the stock price would need to reach $906.70 or close to it before the option would be exercised. If the stock price reach $870 at expiration the likelyhood of assignment is 0%
Good point- Before expiration, OTM assignment is rare, however, anything can happen. At expiration, if the option is ITM even by 0.01, it’ll be assigned.
When u buy to close a CC are you still net positive the amount of premium? Is the BTC amount about equal to the stock price appreciation?
When you buy to close, there is no guarantee you’re still net positive. The new premium could be much more than you received, or much less. It all depends on how high (or low) the underlying moved from the time you sold the call, to now…
Isn’t there a close relationship between stock appreciation from time of CC sale, time of buy to close and change in option price?
Premiums are calculated based on the time remaining before expiration, underlying price, and IV. Example: all things being equal, an OTM option will have a higher premium, the more days there are to expiration.
Which are the cheapest platforms, as far as fees go, to sell covered calls. Robinhood? eTrade? I forget the others.
And I'm guessing if you aren't assigned, you DO have to sell out eventually? I've been watching so many videos, my head is spinning. Must I go to my computer several times a day to see what's happening?
Also, any special tax forms that must be filled out for covered calls??? I know there's a K-something that people say is a nightmare. Not sure if that's for covered calls though.
Robinhood will be cheap- my preference is Interactive Brokers. As for assignment on a covered call- you’d have to sell your shares if assigned. If you sell a covered call on a stock you’d like to keep, long term, you’ll need to monitor it.
As for taxes- that’s another story- though, you can do it in a Roth IRA and not worry about taxes.
Thanks, Rick!
Thank you for watching! May I ask… What was the biggest takeaway?
I appreciate and learned so much with your teaching. I just started practicing on paper trade with selling covered calls. I sold a call DTE 24May at av price $2.51. Now my portfolio shows last price is 3.40 and the market is -325. Unrealized profit is -73. Interactive Brokers computation is so confusing. I seek your assistance to help me understand these figures if you can. Thanks in advance.
Thanks for your kind words! First, congrats on using a paper trading account - this is the best way to learn.
I do not know the stock price or the strike price- which would be helpful to form a more accurate response, so I’ll go with what I have.
If you sold a call for $2.51 and now it’s $3.40, then the price of the stock went up. Similarly, the chances of assignment are also higher.
A broker will show that as a “loss”, only if you bought back the call right now… it would cost you $3.40 * 100 per contract.
However, as you (assuming) already have the stock, its price would have also risen. So, the profits will be (at least partially) reflected there.
As it’s a paper account, I recommend letting the trade run its course.
Also consider selling spreads. Right now, markets are moving up, so a put credit spread will probably do better than a call credit spread.
@@RickOrford Thank you so much for the speedy reply and I am a fan of your teaching skills. I bought Google shares at 144.86 to practice the sell call in the paper account. I fully understand your explanation. Up to now, I only know both sell put and sell call. I will continue to watch your videos to learn 2 leg strategies. You made the videos with such clarity and described them with details that a person new to option trading can understand. Your efforts are much appreciated. I can't understand my Brokers's webinars. Your videos are tailored with new beginners in mind. I will be trading in my real account in a jiffy.
How’s the progress?
@@RickOrford I sold one covered call and the shares got called away. That's not a problem because it was at a profit. However, I sell put on quite a few trades in my paper trading and all were profitable. When I sold a put in my real account, the trend had changed and the trade was ITM as the share price had fallen below my strike price. I missed the chance to close the trade at a lesser loss but missed it. It is nighttime over here when US market opens. The premium is too high for me to close the trade... not worth it. Now I am left with 40 days to expiry and will have to pick up those shares that I actually didn't want to own. So, there is no choice, I will have to try earning premiums with covered calls on this if it gets assigned. Since I do not have a margin, I had to do cash covered..... Will be taking time to look at Samurai....Cheers!
What screener would you use?
I live on Option Samurai: rickorford.com/samurai
Thank you
Thanks for watching so quick!!!
I lost over $70k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $15k profits weekly. Thanks Patricia Annie Brooks
Wow. I'm a bit perplexed seeing her 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.
You trade with Annie Brooks too? Wow that woman has been a blessing to me and my family.
YES!!! That's exactly her name (Annie Brooks) so many people have recommended highly about her and am just starting with her from Brisbane Australia🇦🇺
I'm new at this, please how can I reach her?
Her good reputation already speaks for her .I’m also one of the beneficiary of Annie Brooks. So happy I gave it a trial after being skeptic of the process.
Hi Rick. In case of NVDA if you sold a Covered Call let say at 27 and the stock jumped 100$ thus pushed the Call price to let say to 60 at the expiration didn't you loose on the overall deal? Of course you gained on share price yet you lost 60-27=33 which 3300$ on the Covered Call. Why didn't you include it at the calculation?
Sure- that’s opportunity loss!
@@RickOrford I see, is there any strategies to get passive income on loosing positions using options? Like PayPall bag-holding 100 shares at 120 with the current price of around 60? maybe you can create a video on it. Really appreciate it. thanks
You can always sell a covered call on shares you currently own- regardless of the cost basis. You can also sell them (tax loss harvest) and move on to the next trade :)
What about selling covered calls within a Roth IRA? Then any gains aren't taxed.
Correct- Roth gains aren’t taxed!
Delta is relatively useful to evaluate the probability of assignment.. it’s changing every single moment.. so basically the probability of assignment is real only in the moment you enter the order 😅
Yep- but over time, I think you’ll find delta is pretty accurate- it’s also the basis for how options are priced!
To avoid potential missed opportunities, if you have sufficient liquidity, why not consider repurchasing as the price nears the strike price?
Absolutely!
appreciate you covering risks of all options as opposed to others who only share upside
Thanks for the kind words! You’re right- it’s not a commonly covered topic.
Thank you again Rick , I sold NVDA put at strike 1125 expired June 21 for premium 1630.00 ,as of June 13 , there is profit around 1500.00, should I close the position and move on ?
In a speculative position like that, I like to “take profits” when the short option has lost ~80% of its value. If you can buy back your put for under $350, you’ll have a profit of $1300… enough to give yourself a nice pat on the back for the weekend.
Ps: I invite you to join us on discord: rickorford.com/discord
I closed the position on Friday for 160, net profit around 1500.00, thank you Rick😊
How do I join your discord?
I saw the link just now, thank you.
I plan to sell covered call for NVDA, but I don’t want to be called away, how do I play for June 21 2024 selling covered call
hoping to learn something new but already know everything mention in video.. i take that bad.. i learn about optionsamuri..didn't know that..
Thanks for watching! Now you’ve got a new tool for your arsenal! And they have a free trial to get you started!
Or, just get a covered call ETF, like JEPI or similar.
Right! Some folks don’t want the hassle or can’t sell calls… a fund takes a lot of the “fun” away, but, why not.
Thanks for watching to the end!
Thank you for all of your great videos. I have learned so much. Your training also gave me the confidence to start a trading account. I started in the middle of January with the $10K minimum that Fidelity required. Now three months later, I have earned over $2,500 with just simple trades of selling PUT and recently a few CALL options. My plan is to use these option strategies on a $50-60K trading account to earn an extra $20K per year starting next year when I retire. I plan on using this extra income to fund travel. And the best thing is that I can still do option trades while on extended trips overseas. That way I can keep funding my travels while I am actually traveling. I tell friends what I am doing and I refer them to your videos, but I don't think that I have gotten anyone to give it a try yet. But I will keep trying to spread the dream. Thank you so much.
Very kind of you to say! And yes, selling options in the right market (while not foolproof) can be very profitable.
Look out for my next video about exit strategies- I think you’ll like it, especially if you’re travelling!
So you are thinking you can earn 35 - 40% per year just selling options? If it was that easy , everyone would do it. That level of premium would require selling options on high vol stocks and taking risky option positions, esp if you are selling puts and calls outright.
Who said 35-40%- I certainly didn’t. And you’re right, hitting that rate would certainly require taking on risky bets.
@@someguy95376 You are correct. I should be more specific. I have added funds over that period. I now have just over $25K in total account assets. I didn't originally count the 100 shares of TSLA, but since I sold a CALL on them last week @ $180 ($338 premium for 37 day contract). I need to count those shares as capital at risk. I have lost $642 on one trade, but overall low risk, small trades, most trades earning between $50 and $200 per trade. 30 trades in total. I want to earn slow and steady.
@@someguy95376 You are correct. I should be more specific about my account balance. I have added to my account and it now sits at about $25K. I have been selling cash secured PUTs on stocks below $100 value. I have had 30 trades; with contract premiums from $50 to $200. Last week I sold a CALL on TSLA at $180 for 37 days and a premium of $338. On average my trades have an annualized return of about 30-35%. The trades are small. I also lost $642 on a PUT trade where the stock drop more than 30% in a couple of hours. Overall, the I find the Wheel strategy on stock I want to own or do own to be relatively low risk. I have other accounts that are all long term buy and hold type of investing. My options trading account is separate and I track the results carefully to learn from my mistakes and my successes.
The best part about covered calls is that you make $$ just by letting time go by. That’s a heck of a lot of income for nothing
Right!?!
Is the net profit from a poor man’s cover call equal to the profit minus the covered call cost?
The net profit of a PMCC is the difference between what you get for the sold call, minus the price you pay for the long call.
To deal with the opportunity lost why not just buy more of the stock?
You could! But here’s the thing- there will be the difference between the strike price and the current market price- which is the opportunity loss! If the strike is $100 and the market price is $120… thats $20 of of opportunity loss!
Btw: are you on discord? If so 🚀 rickorford.com/discord - see you there!!!
Lost opportunity? But there is always the opportunity to re buy the shares that were assigned. You have the cash to buy 100 shares again at the assigned price if you buy them immediately. There is only lost opportunity if you don't rebuy shares. What am I missing here?
If it goes up past the premium you also lose the additional upside as if you just owned the share
@@JimMcNutty Yah but why can't you go right back into the market and repurchase same number of shares before price goes up?
Good point- yes, you can always buy them back when assigned… however, say they are assigned at $100, and the market price is $120. The opportunity loss is $20!
Ps: by chance, are you on discord? If so 🚀 rickorford.com/discord - see you there!!!
@@RickOrford Oh ok let's see if I have this straight. Say the current price is $80 and you sell a call at $100 strike. Market goes up to $100 and now the call is in the money. I'm assuming the call will be exercised at $100 immediately. If so, you can rebuy shares at $100, so no lost opportunity because you gained from the rise of shares from $80 to $100 and if you rebuy immediately, will gain from a theoretical share rise from $100 to $120. But what you seem to be saying is the call holder might not exercise the option till the price is at $120 ? At which point they will be assigned at $100 and I will indeed have missed out on $20. Is that right?
@@StillChrist ITM options are normally assigned at or around expiration, but could happen anytime. Eg. If XYZ's current price is 80, and you sell a call at 100... then the price goes to 100, or 110, or higher, assignment isn't 100% guaranteed. Many times the holder will simply sell the option to someone else and take a profit - infact, if the timing is correct, it might be more advantageous to the holder to sell the option rather than assign it. PS Do you use discord? If so, feel free to join us!
What is false about what you say assumes you need to keep ownership of the stock shares
Sorry? I’m not clear on what you’re trying to say…
@@RickOrford Allowing the buyer to purchase the shares at the strike price is not the end of the world and might be more profitable.
Maybe, but consider this. Maybe your position of 100 shares is now up 50, 100, 200% or more. This could mean 10’s of thousands of dollars of unrealized capitals gains. If the shares are assigned, you could end up with a huge tax bill in April of the following year!
@@RickOrford Not if you use buy-writes
Sell calls on retirement accounts so you don’t need to worry about taxes on those profits, but only when you’re cashing from them. And if on a ROTH IRA no taxes at all!
i prefer jepq.
Right, that too! There’s so many! And for my Canadian friends, Harvest ETFs appear to have some good options as well!
why doesnt anyone talk about the biggest risk? and thats owning 100 shares of a stock and writing covered calls and watching the stock blow in value by lets say 50% and it was a shitty stock to begin with. now youre stuck holding the bag waiting for the stock to recover. even lets take SMCI these past few weeks. its gone from almost 1100 to 713. writing CC on that and picking up 100 shares is a huge paper loss. waiting for it to rebound who knows how long it can take. a person would have to keep selling CC's on above a breakeven point and keep collecting premium waiting on the stock to recover if it did. and if it was one of the semi's to fail..well then watch you. there goes your entire 100K.
Buying back the call to close out the trade and then sell the stock would mitigate it… at least a little.
@@RickOrford What if it tanks horrible within just few days , you may get 1% return for a week by the soled premiums but stock can go down by 20%
@jiti5034 if the stock tanks, you can buy back your call for Penny’s on the dollar and then sell your stock. As you’d have already owned the stock, that part is irrelevant.
@@RickOrford Yah but when it tanks that loss would be far more than the soled call premium , and that is the real risk not the stock being called because it goes up ,, that is a sweet problem , I once had Intel or GE I don't remember went from42 to 6.60 soled call premiums were peanuts
@jiti5034 if you own a stock, and it tanks- then you lose money if you sell it- no matter if you sell a covered call or not!!
JEPI has only given 3,53% profits in 1 year and MINUS 5,51% in 3 years! Why’d you invest in this fund
Ahhh… You’re looking at the stock price alone… don’t forget to add in the distributions (which YF/GF doesn’t compute). Here’s the distributions by month: www.nasdaq.com/market-activity/etf/jepi/dividend-history - add those to the stock price and your return will be better :-)
one of the risks of selling calls on a portfolio is that 1-2 stocks will run much higher than the calls sold and those lost stock price increases can offset much the premium collected on the portfolio as a whole - any it does happen. Opportunity cost is a real cost that options traders don't always account for.
Absolutely true- and it was the one of the first risks I covered!! I’d hate to lose a position I’ve owned for years!!
That’s not what opportunity cost is. Opportunity cost is, essentially, the other ways that resources can be spent. The opportunity cost of buying a $10 option is, say, a fast food meal.
“Missing out of profit” is not opportunity cost. What it is, instead, is FOMO thinking.
I’m not saying missing profit because of a stock run-up past your call position is great. I’m saying it’s not a loss. It might cost you more to buy back into the position if you want to, but you didn’t lose any money. You missed profit, but that is *not* the same thing.
Why are you not talking about Downside risk which can be huge
Since you already own the stock, you’re exposed to downside risk regardless of selling a covered calls. Risks of selling covered calls are different…
@@RickOrfordWhat if I am starting with cash and buy stock and sell CC at same time , Many people do that , it is not necessary that one has bought the stock which has already appreciated and THEN he is doing a CC My point simply is those who promote CC don't highlight the downside risk enough, stock getting called away is a sweet problem you get your original cash ++ and can deploy it again in the market with another CC etc
@@jiti5034what you are describing is a buy-write… and different from the point of the video. If you buy a stock and sell a covered call, be sure you are happy to keep the stock!
@@RickOrford Buy write or CC as you call it is separately, both case the downside risk is same ( unless the stock ha already appreciated) it seems you don't like me pointing out the Downside risk!
@@jiti5034 The downside risk is the risk of owning a stock- not selling a covered call. Perhaps that’s why it’s not mentioned!
Rick you need a mic.
You’re right :)
So why waste time making a youtube video and course? You should be busy trading your system and making too much money to stop...
🤣😜🤣😜🤣
How many trades does he make per year?
The Fed says traders have to make a certain number of day trades and options traded.
The options market is similar to betting against someone who can buy the pot.
Even if you have a winner you will never be allowed to flip the hand because you will never be able to meet the money bet against you. Options are like playing with and open hand. The stock market is about forced losses not profiting from your shares.
Holding a stock for 10 years? How did that work out for people in 2008? How about 2020 when the world was going to end? 2022? How does anyone plan a retirement around that? How do you plan for being forced into retirement because of sickness? I have never known anyone who wanted to retire only people that were forced. I'm 48 and I was forced to. I'm still trying in this awful market and it's constant punishment and is damaging to a person's soul. I would rather have government benefits than trust corporations.
Sounds to me you’ve had a lot of bad luck in your investing career, and maybe doing it yourself isn’t the right way. It’s not for everyone! Thankfully, there’s more options than ever for investment- that don’t involve stocks or options!
@RickOrford I have not had bad luck in my journey. Only bad experiences with Wall Street investments. Every other investment I've made has beaten Wall Street investments on unparalleled levels.
Wall Street is like a hole in the ground we are forced to throw money into. I believe wishing wells offer a better chance of an ROI.
@johnd.5601 you’re not alone… but, why watch a video about covered calls?
selling covered calls on enron was a solid strategy
Until the stock went to 0…
Tax risk !
Only sell options in tax free ( retirement ) accounts .
Good plan!
You most likely underperforming..... 😂. If not you just short time Lucky.
What makes you say that??
Hey brother, there is absolutely NO RISK/ ZERO RISK in selling covered calls !!! ... I do it all the time and it's nothing but MONEY.
I hear you! Covered calls are probably the least risky trade- but there’s things to consider:
Have you ever had shares called away at a price higher than you paid? This is tax risk.
Have you ever sold a covered call, only to get the shares called away as the stock skyrocketed? This is opportunity loss.
@@RickOrford Everything is a risk!
I'm looking to do a covered call on AMC, I noticed some closer to the current stock price have the p/l graph shows a point where the premium could go down, is that true? So wat otm don't have a loss on the scale, should I just get those
Hey brother, tell us you don't understand financial risk or investing without telling us you don't understand financial risk or investing.
The risks here are numerous when your stock goes way up or way down..😩
Very basic vid.....If you are experienced, go to the next one.
More advanced ideas are found in my discord!