You have truly taught me sooo much. I always recommend your videos to newcomers and veterans. I use to disagree with so many of your tactics,, "why close a call at 70%" "why buy leaps, just buy the stock" .... you have truly changed the game for me amigo!!!! Thanks!!!
Hey Brad, I have watched a few of your video's now and I must say, you certainly explain complicated things well! I love your video's please keep them coming!
Hey Brad! I am still learning about options, and I was curious to what you meant by saying you were protecting your LEAPS when you closed out on a loss of $76. How does that work? Why does closing that position out protecting the LEAPS in a bigger picture? Thank you in advance! Edit: Oh, I see the answer now from another video of yours (but please feel free to correct me). Because if the PMCC option is exercised, you are forced to buy on your LEAPS and then sell to cover for that PMCC - so that's what you meant by "protecting", expensing just $76 to protect potential gain of lots more.
Great video!! I had found your videos on LEAPS this last spring after I lost a few hundred on learning options and yoloing calls with no real strategy. I decided to try something different and although it was a meme stock (something I would've have definitely reconsidered now that I have more experience) I took a chance on an slightly ITM $13 LEAPS for 01/22 :) and of course it exploded the next week blowing past my covered call but instead of letting it go I believed in the upside potential and protected the underlying through rolling out and up. At the beginning of this month I have more than made up for that little hiccup, paid off my initial premium and now collecting free premium till I decide to sell not to mention I'm still up over 200% on the underlying with a few months left to go. You really changed the way i looked at options, thanks for kick starting me off!!
Brad, just getting into covered calls. I wanted you to know out of all the articles, books and videos I’ve Read and watched, your videos are the first that I have understood enough to give me the confidence to finally start trying trading options. I have a decent portfolio, but I’ve run out of money to just keep buying stocks, so my move to stocks. My starting plan is I have bought 100shares of T (depending on the earnings report) and I plan to sell as a covered call. Anyway, wanted to to thank you for your videos. Tom G.
Great video, thanks for sharing. I understood why you sold the first option @150, but how did you calculate the other entrance points for the following sales (@160, @165, @155, etc) ?
This is absolute gold dust! Thanks for sharing this. It is easily the best options related video I have seen, so far. I like the fact that you talked about the errors you made in the process. I also get a better understanding of what to do when the covered calls do go the way you want (take the hit and move on). One question: how do you know what the right strike price is to sell the covered calls? For example, is there a delta consideration? Again, thanks for sharing your experience,
Hi Brad！ Thanks for the informative video! Very useful! Watched 10 times but still have 2 questions: 1) in you first example, when you first opened a short call, you have selected a strike price (150)higher than the breakeven (149.60) of your leap call. That’s easy to understand! My question is how did you pick 160 for your second short call? Or even the third’s strike ? fourth strike? Please kindly explain! 🙏 2) just in case if any of these covered call becoming IN THE MONEY, what to do? Closed it and open a new one? if yes, how to pick the new strike? ( sorry for my poor English)
Since the stock price was already higher than his breakeven price, I imagine he used strikes similar to how he explains in his other videos- strikes close to.17 delta. When he's doing a wheel strategy, he's doing strikes around .30 (and if assigned, can wheel it into a CSP). However, when doing PMCCs against a LEAPS option, you DON'T want your short leg assigned- so using a strike with a delta around .17 and closing once it reaches 40-50% profit is a very conservative way to do PMCCs and avoid having to exercise your long LEAPS option.
One of your BEST videos, I love leaps and till now, all my closed leaps have made be good profits apart from covered call income. I still have 13 LEAPS contacts which are open, except one, all have expiries in 2022 and one in 2023. Your video would greatly help me and deciding the strike selection and time for closing.
Very nice video, thank you. As for the Pepsi call options you were selling for low premium. The reason why people would say it’s not worth it is because if the stock happens to rally you loose your upside for such a small amount. The risk / reward ratio is off for such low premium.
Agreed but he does not want to lose the LEAP by being threatened by a runaway price as we saw later when he had to close for the loss. The problem will always be limiting your upside and capping it when stocks can run hard and fast well past your strikes which they will do. It is often best to not sell cc's and just HOLD the Leaps until favorable to sell and save all the headache.
How do you check the mean for IV? How can I check that, you drew it in your video around 7:15 minutes on the video. Thank you for you videos, I have learned alot.
I bought LEAPS on the dip on FL, T, DRNA and ZNGA at the .85 delta. I’ve started the PMCC on FL with nice premiums. Waiting for the others to get ripe. Wondered what happens to LEAPS @ expiration. Thanks for the timing of this video!
Brad, Brad, Brad! I knew there was a reason to keep following you - LOL! Been watching all your stuff for a while and have been hesitant on pulling the trigger on a PMCC due to the cost of the call option to BTO. I have had a hard time seeing how spending that much would benefit and how the small CC's premium would make up that large amount of investment. This video however has clarified it all for me now. This was fantastic and amazing to watch and see the results in as real time as you made it. Thank you for this. I'm going to jump into some PMCC's now that I have been holding on the back burner. Keep up the amazing content. Thank you for your open and honest approach and for helping us little people understand these concepts so much better. You are the best :)
This is a great return. All the scalping aside, the biggest factor in your success is buying a call on a stock that went up. How do you decide on a stock and if you think it’s going to rise?
Awesome video again! For the implied volatility, while looking at the charts how would you know if that percentage is at the low and or high end of graph?
I just learned a lot from your video today. I now know a better strategy for when to sell my leaps. Plus I never even thought of buying leaps after earnings (IV crush). Thanks brother! Very helpful!
Hey Brad. Thanks for sharing your strategies on PMCC. Very helpful. Just curious about your thoughts on selling LEAPS. Why would people sell Leaps if we all know in the long run stocks always go up. Why would anyone sell deep ITM Leaps ? What strategies are they playing ?
They probably sell and then buy back when the LEAPS is in their favor way before expiration. Remember stock does not go up in a linear line during the leaps contract term.
Market makers . They buy and sell. Make the difference up at the spread . Imagine selling a call and then buying 100 shares a the same time . Then selling the shares and buying back the call later. Balance it and collect the spread. Just look at the bid ask spread on some leaps.
important question- where do you look to see what the "mean" implied volatility of the stock when buying the leaps.... so that you can see if it is "low" at that moment in time when getting ready to purchase the leaps.
Ok so like, let me see if I understood. So you bought the first option at a $130 strike price for $1960 then you sold and bought other other options for that same stock to collect premium? Like when you sold the options, did you already own shares of that stock and sold covered calls against it? Or were you selling calls against that $19.60 option?Like what's happening there?
Couple questions from a fellow teacher: Would you try to juggle more than one contract? How confident are you that if your short leg is exercised that Robinhood would in turn exercise your other leg?
Thanks for this outstanding video! I've always bought calls ATM or slightly OTM since I'm ultimately bullish on the stock if going long. What is the benefit of paying more to BTO at 75-85 ITM?
I don't mess with Puts.. just funding wise and not enough time to watch it. I do however run the LEAPS.. I have four going at the time - total spent is 1,600 - just waiting to see where and how this pans out . One ends in Jan 22 the rest in Mar/Apr 22. Ended up getting well under the stock price. I have other stocks that I run CC's weekly basis and that gets about $30/week - not a $M-aire here.. so bits and pieces here and there.
Some next level derivative trading 🤯 Well-done though! Curious how often do you deploy this strategy? Thinking about trying this with 1 - 2 % of my portfolio. Would you recommend?
Whenever it feels right. 1-2% is great. Start with what you are willing to use. I personally use 8-10% for my speculative investments (crypto, day trading, options, etc)
Question: if I hope to sell covered calls on a leaps option that I bought.. why not sell a put option on it? That way it decreases changes of hitting above the strike price in out of the money. Not sure if I’m making sense
So just so I understand correctly, I can sell calls against my LEAPS in robinhood with L3 options? I just got approved for margin and L3. Webull seems to be lame with options and won’t allow it. Just can’t find much info on LEAPS and diagonals for Robinhood. Thanks!
Do I understand correctly that your leap value went from 1535 to 2165 during the period PEP went from about 148 to 156? What is the best resource for checking leap value changes under certain hypothetical situations? Super Great Channel! Thank you sir!
This was the first hit I got when I was researching to close a profitable Leap. I have one that expires 1/2023. It’s nicely up by 355%. I had not bought a deep ITM call, but a much lower delta. Now it is deep ITM. Would you suggest closing or waiting. I am a little wary about selling a covered call against this even though the ROI on covered call is around 33% for 45 days. Still not sure about what to do.the stock is clearly on an uptrend. Would appreciate if you can advise. Thanks!
Hardest part of trading is knowing when to get out. And hindsight is always 20/20. Go with ur gut. I sell at the point where I’d be pissed if I lost the money
Great video! I’ve been buying deep in the money leaps, after I see my stock take a dip that I feel will come back . I haven’t been doing the PMCC yet …This is my next adventure !
Hello Brad! Everyone happy New Years! Question? When I sell puts or cash covered calls I usually let the stock expire on the expiration rather then closing early for smaller gain. For example, I sell a put to expire Friday January 7th for 23$. Rather then closing it Wednesday for say 10$ i let it expire on Friday and from what I believe I get to keep the 23$. Brad or anyone why close it early? Is this just a preference meaning your up say a certain percent on Wednesday so why risk it any further? Thank you
I try and close everyone one and have a few videos on it. Here is one of my most recent ones. ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-vMWuYPMRYiY.html
PMCC might work on some slow moving stocks like pepsi and waste mgmnt but a lot of times I've done it on stocks with high growth potential and have gotten burned where the weekly premiums aren't worth the time and risk of it being blown up, example on $AMD its a stock that I bought a LEAPS at $70 and when the stock grew to $110/share I just gave up on selling calls because the $50 premium wasnt worth the risk of it blowing up, plus protecting the long call was stressful
Got some Tax questions in case it is in anyones wheel house... Maybe Brad knows :) Does anyone know the exact tax implications for a leap getting assigned? Possibility #1 - The gain is the difference between your leap strike and CC strike * 100 Possibility #2 - The gain is the difference between your leap Break even and the CC strike * 100 Feel like #2 is the lesser of two evils in terms of Tax event. Another Question - what about the Tax implications of exercising a leap - do you take a cap gain LOSS equaling the total paid for the leap?
Does your broker not charge fees for options trades? Mine (TD Ameritrade and Schwab) charge 0.65 each way. So those calls you made $3 on would've only been $1.70. Sorry if this has already been asked. I scanned the first 40-50 comments and didn't see it.
@@BradFinn yes and no, If I cash out I could use the money to buy the dip on other stock that already had earning and dip massively like CHGG or ATVI and also I didn't want to risk holding it through earning. I was just concerned about how the earning would react to the current gain I have, if there's no earning involved, would you just keep holding it until price target reach? Thank you
@@Kunalexander you can close then open new position at different strike and use profits to open position in different company...of course you'll have tax implications to consider as well
the keyword is "greedy" trust me guys.. this will get you sooner or later.. i found out the hard way and i am stress out and bashing myself.. i gave up 32K to get $37k if i hold just 1 more week and i got burned..stock tanked..i lost all 32K..
Thanks Brad, great video. Appreciate the knowledge that you provide and the transparency. Sold my first covered call yesterday. With your help, I'm starting to understand these things called options.
@@BradFinn I have a couple of questions for you. 1) the LEAPS and PMCC are independent transactions that do not constitute a spread, right? 2) if the delta is good, but the IV is too high (higher than the median IV), we pass on the strike price and maybe even the stock?
Very nice walkthrough through real, down to earth trades that most people can actually relate to. Well done! And yes, once you hit $69 profit on your short call, you better close the trade :-)
@@BradFinn thanks for the reponse. Let me clarify. I thought the value would only be above purchase price once the underlying stock was above break even price.
Me looking at WM deep in the money call for Jan 17, 2025 at the $115 strike costing $4,600 despite the stock only being around $151.71 on 2/15/2023. Yikes. Would love to buy a covered call for $1,900. lol
The best thing I've done is keep a Spreadsheet of my cost Basis and keep it well above when selling calls because I've gotten burned once or twice being greedy.
BRAD I NEED HELP!!!!!! I have been running the wheel on Marathon (MARA) and got 4 contracts assigned at $40. Started selling calls for premium. About two weeks ago I sold calls at $45. The price started to climb fast so I bought those contracts back and sold at $55. The price run didn't stop and not the $55 calls are too expensive to buy back. So I used the premium I collected (plus some of my own money) to but $56 calls. The calls I sold and the calls I bought expire on Nov 29th. I want to know if I can leave this position to resolve it self at expiration, bear in mind I don't have enough capital to execute my bought calls without the sold calls being executed. If I can't leave the position to resolve itself, when and how do I unravel this for max profit. Please answer with any advice, I got extra bear money if you do. Keep up the great work. Love the videos! You making the world a better place my friend.
@@BradFinn bro you caught me not finishing the video before I made this comment. Anyhow, awesome Leaps and CC. I have not done leaps. I was buying 100 shares of companies I like, capital is always an issue. Maybe would try this. Better to buy one after Iv crush, is it after earnings you choose or bad news day?
I do want to know why you held out on us so long seeing as you've apparently known about this strategy since 2001 but only shared with the class a few months ago?!?!
Curious why you do not use the 2-option Order - Are you buying to close at a different time than selling to open to maximize premium or some other logic?
