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I'm not sure how I stumbled across you, but I am thrilled that I did. I'm very much a beginner at all of this and it's so confusing at times. You are the first person that makes sense to me. I have only watched a couple of your videos and I already have a much greater knowledge of how everything works. Thank you for helping me maneuver through the sludge of it all. I'm looking forward to watching all of your videos. Keep them coming and thanks again.
As always, fantastic video Chris! I sent this one to my Dad and Uncle to help teach them about how they can sell stock they have in their retirement accounts. Thanks for the graphics and all your hard work. I doubt anyone can make as clear of a video for CCs as this one. Merry Christmas and Happy New Year!
I think I needed to take the time and write this comment to thank you. I find so smart and convenient that your RU-vid videos match, your website's explanation. This is very efficient, and straight to the point. Thank you very much for sharing your knowledge. I hope I get to meet you personally someday. Greetings from a Venezuelan living in Germany.
Good review of covered calls. I use them a lot. I have shares in one company that I have been trading since 2017. The shares pay a monthly dividend but to generate even more cash flow I have been writing covered calls on the shares. I have actually made more on the options selling than on the dividends paid. I did let some of my shares be assigned as I my strike price was over double my original cost per share so I decided to take some of the profit. At the moment I still hold a number of shares but because of the money I have made from dividends, options premium, and the capital gains on the shares I sold, the current shares I own have been completely paid for with the money gained. So now I continue to receive monthly dividends, continue to collect premium from writing covered calls, and if the shares get assigned I am still in a profit position. Currently my position is in the money so once the option gets closer to the expiry date I will have to decide if I will buy them back or let them get assigned. Who knows, the price may drop and will expire worthless. Time will tell.
Glad to see you're back! Love your videos. It would have been nice to see selling an ITM put as an equivalent to a CC position, except with a lower BP effect.
Hey Chris it seems to me you recently stopped talking about other strategies and mostly focusing on the cover calls. Have you discovered after all of these years that the cover call is the best strategy of them all?. Thank you
Wow thank you so much! That's a super nice comment and I appreciate it. Thank you for watching and showing your support! Another video like this one coming soon.
Hi Chris, I wonder if you have an opinion on Tastylive's Lookback backtester and if you would recommend any other software (free or not). Specifically, I'm unsure what stop-looses mean on these tests. I don't know if contracts are immediately opened after a stop (just like a roll), or if your exposure is closed until the next scheduled contract opens.
Question- so on expiry of my covered call if strike price is higher than current stock price why cant I exercise n sell at strike price? After all when stock is higher than strike price shares get assigned so why not when strike price is higher than stock price??
Fantastic video Chris. I have watched your PMCC. Can you please make a video of Poor Man Covered Put?. I am a poor Beginner, so I don't know if this exists. Thanks.
Thank you Linh! I appreciate the comment. A poor man's covered put would technically be a long ITM put (long-term expiration) with a short OTM put (short-term expiration). If you can take everything from this video and flip it on its head, you would get the basics of the PMCP. The time decay + IV changes section would apply the SAME to the PMCP though.
@@projectfinance Thank you very much Chris as a great Teacher. Your investment as such efforts to explain in a professional manner. May God Bless You with Prosperity and good Health. Just 200 hours study to go and hopefully starts with Tastyworks.
Great video. I have a question. At 27.37''' you said amzn is getting beaten down, so I wouldn't short any more calls. I didn't understand why? Isn't it better to short calls when the price is declining if I want to maintain my long position on the stock itself? thank you.
The logic is if the stock price is falling, there could be a reversal soon. You don't necessarily want to short calls against your stock during a big decline because if the stock price reverses then you'll be left with an ITM short call and need to sell your shares or buy back the call for a loss. But yeah if the stock is going to zero then it is better to keep shorting calls against the stock.
In the first example, if strike price at 125 was hit, won't the premium of covered call go up as well leaving us a big loss? 1.41 was premium when SP was 121, now stock price is 125+, premium will definitely be much higher. But I don't see you including that in your equation. Am I getting it wrong?
Right. If you short the 125 call for 1.41 and the stock goes up quickly, you’ll have losses on the short call position but more profits on the stock position (the CC p/l as a whole goes up). At a certain point, the short call will lose $100 for every $1 stock increase, completely offsetting the stock gains, which is why the CC risk graph flatlines above the calls strike at expiration.
Not really because the profit potential would be tiny and you’d have a high chance of assignment. Buying a deep ITM covered call is synthetically the same as shorting a put at the calls strike. Stock at $100. Buying the shares and shorting the 80 call would be the same as not buying the shares and shorting the 80 put.
thanks. Great vids btw, your way of teaching is very clear, not all over the place, and very inviting. Good job Oh, please bring back the pulp fiction banana photo.
I understand there’s risk of the 100 shares losing value. But independently of the shares owned, can the contract be valued less than worthless? I’m not understanding fully the max loss potential
You need enough to purchase at least 100 shares of the stock in question, and I would stay aware from leveraging margin when doing so! Remember the key to covered calls is to focus on those stocks with a long term growth pattern otherwise you can be stuck in a position too low for any decent premium. Caveat Emptor!
I see you have taken away the " Bitcoin" in the background . I presume , you will no longer be discussing this disaster, based on your previous videos , and your " All In Bitcoin"
True since it’s a bullish strategy. However in a bear market covered calls outperform stock. And in a super bull market stock outperforms CCs. So the covered call is a moderate bull strategy.
It takes lots of time learning about and thinking about options to really grasp the concepts. I do my best to explain simply but it still takes time. Be patient and please ask questions if you have them!
@@projectfinance I'm not knocking your teaching sir. You do a great job. I'm just wading into this stuff, and I realize it will probably take a while for the "light bulb" to come on. LOL God bless you!
