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You would be put into the shares at $83.50 if exercised (most certainly if stock closed below $83.50 on expiration day and less likely if trading below $83.50 before expiration). Your cost basis would be $81.09 plus commissions ($83.50 - $2.41). GLNajehHejan said:
You can always sell to close the call today for $4.98 and pocket the 46% gain.Stupid question.
normally I use etrade. Did aCCL call awhile back.
CCL $25 call exp 07-16.
Shows me up 46% but also says it needs to hit $28.45 to break even. Current price $4.98 avg cost $3.45
so, I assume im "up" 46% but not really up at all.
Gotcha, so, The 28.45 is only relevant if holding till close. MAKES SENSE NOW!
This was a very interesting show to watch, thanks for the recommendation. I have CNBC on in the background most days, rare is there something actually useful to listen to.
I have read about it and watched a couple videos on it. I think its fine if you are looking at a stock you don't mind owning. It seems like your just combining covered calls with cash secured puts to me. You always have either one or the other month to month.Sand said:
This is actually what I was referencing above when I said the PLTR Puts I sold were not a one-off.Sand said:
How I understand it:Ok. I'm an idiot. I fully understand that. I have begun researching different methods of call/put strategies, and I began reading about 'poor man's covered calls'.
So, this is being sold as an alternative to normal covered calls because the upfront capital is not required to enter the trades.
Example:
Stock at $100
Purchase (Expiration 2) 90 call for $15
Sell (Expiration 1) 110 call for $5
Net debit = $10.00 on a 20-point-wide long call diagonal spread
But, here is where I get hung up. In order to sell a call, do you not have to own 100 shares of the stock? So, the initial capital requirements are exactly the same as a regular covered call? I'm sure I'm missing something completely obvious to people who have more trading experience than me, but this has me thoroughly
I did not realize holding the long call would be considered collateral for selling the short call. See, learning something new. Thanks!
Well, full disclosure, I have never done this method, but as I have just recently been learning about this method, that is what was stated on a couple of the videos. Would love for someone with more experience to confirm.
True. I have Level 1 on Fidelity. I'm not jumping in head first. I'm just learning and trying to understand the mechanics before I advance any further.
15 PLTR Aug 20 '21 $30 Call MktDayMkt 6.30† Executed
Not an expert. I'd say around 45-50 delta. Maybe let the stock surpass today's high, then roll up & out for about $.50?? Too bad you have to go way out until July.
You cover any of this today? A big move, but still unlikely you get there.KGB said:
Chinese EVs had a big day, he has an outside chance. They've been getting crushed lately.
Thanks for the response. So the premium is 55 cents? Meaning if I sell that call I would get 55 cents in my account immediately and be obligated to sell the shares if the stoke price reaches $12.50. Why would anyone sell this call for 55 cents?Fixed that - just a couple orders of magnitude off.
It's .55 per share. Since you would do this increments of 100, you'd receive $55 (probably $54 after commission).
Sorry bud. It's just money, and a lot of us respect the attempt to change your life. The beauty is, you still can. Grind back!
Sorry - you were right. These are in lots of 100, so you'd sell the call for $55. The put would get you $3. Yeah, neither of those look appealing from a premium point of view. The rule of thumb I've seen is 2% per month. These are way below that.
Mine rarely make it to expiration. I usually close out puts that were sold once a vast majority of the premium has been collected (80% to 90%). The risk vs reward makes it unwise to milk those last few percentage points. Just as relevant is that selling cash secured puts requires holding that cash so by closing it out, you get access to that cash to rinse and repeat. I don’t want to tie up capital for pennies on the dollar. If they’re naked puts then this isn’t an issue but selling naked puts is not in my DNA.Bossman said:
By "naked puts" you mean selling puts on margin vs cash backed?
