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This is good stuff here. I am new to options trading, been hearing about the term "roll" the option for the past few months watching options videos, but not knowing how. And 8:30 is like my "gotcha" moment. Thanks Scott.
I wonder about rolling CCs when price approaches/hovers the strike on stocks. When should you roll? A few days before expiration? Roll right when the strike is breached? What's the risk of early assignment? Perhaps one should roll right at breach when the cycle in question is right before or includes ex-dividend date.
I definitely would not roll once my strike got breached. Early assignment risk only becomes an issue if there is no extrinsic value remaining in the contract. I've got a video on that topic in case you're interested... ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-CX9B-qPJmMM.html So I really wouldn't roll until the last possible moment. If expiration is right around the corner, and if I'm beginning to run the risk of early assignment, then that's when I would roll.
Hey you got a point with lowering your short call but doing it carefully. But there is still a risk of the stock surging very quickly in a short amount of time before you can necessarily buy back the call, and in that case you would take big loss no? Would you recommend using bots like they have for option alpha to automate trades for certain loss and profit thresholds?
Yes, there is always the risk of the stock surging when you are selling covered calls below your cost basis. However, if that happens, then you can roll the call to the next expiration cycle to collect additional premium, raise your strike higher if possible, and avoid assignment. As long as you watch your position carefully and you roll the call before it goes too far in the money, then this is a safe way to manage such a position.
Spy calls suck cause of the put skew. You can sell bear call spread then if it rallies you could buy back the short one and sell the long and should be able to roll up to cc for credit same expiration. You need to buy 6 or 7 puts to hedge you long call so you don’t lose money when it goes against. 7 puts a strike below the 90 delta would only cost another $1000. If spy fell far enough you actually make more on the puts than lost on call
Sorry for the dumb question.. but.. why Sto arrivando! You adding 90 dollar to your long call strike price? Shouldn’t be enough to sell call option above 360?
