Are these stocks you want to hold anyway? What if the you keep the call premium but the underlying takes a fat shit and drops 3-5% for example. You may as well complete the "wheel strategy" and sell cash covered puts to lower your basis and then once its exercised and you have the underlying then sells the calls as you are doing. If you never get assigned with the put then you keep the premium rinse repeat
This is a shockingly easy way to make big money
Ayden Long
Christopher Morris
Oh, ok, now I get it. Thanks guy
Adrian Kelly
The third type, me, is the guy who didn't even read OPs post.
Jeremiah Cooper
I sell covered calls sometimes too, just don't act like it's free money lol.
Colton Jones
1.Create a Fidelity account.
2.Create a brokerage account with Fidelity. You can then fill out an online form to request authorization to trade covered call options. fidelity.com
3.Put money into your brokerage account. You can do this by transferring money to it from a bank account.
4.Buy stocks in increments of 100 for companies that offer weekly options contracts. cboe.com
5.One options contract = 100 shares of stock. For every 100 shares of stock, you can trade one options contract."Sell to open" one options contract for every 100 shares you have of a stock, set the expiration date a week out, and set the strike price for 3% above the current price per share; you get the options premium immediately and what happens to your stocks will be dictated by the price per share as of the target date.The options premium should be about 1.6% per week for mainstream companies.
Example:You have 885 shares of stock of Company A.You can sell 8 options contracts.Assume the price per share is $50, the target date is one week out, and the strike price is $51.50/share(3% growth from current price per share). Your options premium is 1.6%,so 800 shares x $50/sharex1.6%=$640 in weekly options premiums for your $50k worth of stock. ($640x52 weeks = $33,280 in options premiums alone each year, ceteris paribus).Let's pretend now that as if the expiration date of the option the price per share is not at least the strike price; this means that the option expires and you keep the options premium.Now let's pretend that the stock's price per share exceeds the strike price (ie it is at least $51.50);your stocks are sold to the holder of the options contract for $51.50/share no matter how high the stock's price is-but you still keep the option premium.
Essentially, in exchange for a guaranteed payment, you are capping the amount of profit you can earn from a stock.
Evan Cruz
Excuse the weird spacing but I was like 42 characters over postlimit
Jaxson Reed
My nine year old daughter has $5k in her brokerage account. She can make $80/wk at the 1.6% option premium rate with 3% wiggle room for growth before the option can be exercised--rather than expiring.
$80 x 52 weeks = $4,160 in options premiums per year.
3% growth per week as the cap means that I'm giving the stock 3% x 52 weeks (156%) room to grow per year, which is freakishly high for a stock.
$5000 + 156% growth ($7,800) + $4,480 = $17,280 what the $5k became at the end of the year, assuming the 3% strike price is hit each week, 1.6% option premium each week for capping potential profit at 3% each week, and the options premiums not being reinvested each week to buy even more stock to cause even greater exponential growth.
Assuming the stock doesn't go up a single penny per share but I'm still earning the option premium for my daughter, that's $5,000 + $4,480 option premium = $9,480 at the end of the year, not counting exponential growth via compounding growth via reinvestment.
Brayden Moore
Here's where I'm lost. How do you not lose money if the strike price isn't hit? I thought call options are a contract in which you have to sell your option at its expiration.
I don't understand how you're not losing out on your premium.
Oliver Perez
If the market an heroes and OP never gets to sell his options. That's what a black swan is (retarded swan posters think this will happen "in X days")
See: 2001, 2009
Camden Walker
What about taxes?