oldarmy1 said:

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Alternatively you could buy shares of companies and sell covered calls in the money which gives you a lower net entry or a higher payoff profit.

Bottomline - as I say - get money to work for you. Buy NFLX and sell a Feb $335 covered call for $23. You are going to get either $358 or net entry of $347 - $23 = $324.

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Hypothetically, what would happen in this situation if NFLX went up to $500? Just trying to understand the strategy a little better. Aren't you just capping your upside in exchange for making more of the stock doesn't move much?

mavsfan4ever said:

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oldarmy1 said:

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Alternatively you could buy shares of companies and sell covered calls in the money which gives you a lower net entry or a higher payoff profit.

Bottomline - as I say - get money to work for you. Buy NFLX and sell a Feb $335 covered call for $23. You are going to get either $358 or net entry of $347 - $23 = $324.

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Hypothetically, what would happen in this situation if NFLX went up to $500? Just trying to understand the strategy a little better. Aren't you just capping your upside in exchange for making more of the stock doesn't move much?

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You'd only going to get $358 if NFLX were to keep on trucking higher. Frankly, if you're hoping to be long you want the stock to labor below your entry and work close to your covered call price. If it falls below the covered call $335 price then you'll keep the premium and still own the shares. If the stock continues to come off highs but not to the point of your $335 gets called out then you would either buy shares at the new current price, rinse repeat or hold. Perfect world would be for the stock to fall to $336 area so even if you get called out you keep the premium and can turn right around and buy the shares at $336. Then look for a bounce before selling your next covered call closer to the bounce price.

12 trading days. That's all it took for our OLED to go from $78 to over $100.

SQ $50 to $71 in 15 trading days. 42% gains.

Two biggest gains to be had are V bottom's and breakouts. You guys can run the % gains across all the shares from 2350 to here and see that fund managers having their hands tied by having to be largely invested is a crock.

oldarmy1 said:

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SQ $50 to $71 in 15 trading days. 42% gains.

Two biggest gains to be had are V bottom's and breakouts. You guys can run the % gains across all the shares from 2350 to here and see that fund managers having their hands tied by having to be largely invested is a crock.

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Should have a government shutdown more often!!!

HAHA! All the hand-wringing.

Hey look at Feb 1st JD $24 calls. Over 1k traded today. Interesting.

Why do you like JD so much? I think BABA is better long term, mostly because I've used it successfully to purchase material for a project and that experience was surprisingly positive. I'm curious why JD gets more attention it seems.

aggieland09 said:

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Why do you like JD so much? I think BABA is better long term, mostly because I've used it successfully to purchase material for a project and that experience was surprisingly positive. I'm curious why JD gets more attention it seems.

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I listed BABA as one of the big buys off 2350 S&P. It's popped nicely but JD has come only a few dollars off its bottom and has a breakout to give.

oldarmy1 said:

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aggieland09 said:

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Why do you like JD so much? I think BABA is better long term, mostly because I've used it successfully to purchase material for a project and that experience was surprisingly positive. I'm curious why JD gets more attention it seems.

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I listed BABA as one of the big buys off 2350 S&P. It's popped nicely but JD has come only a few dollars off its bottom and has a breakout to give.

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Thanks for the reply!

aggieland09 said:

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oldarmy1 said:

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aggieland09 said:

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Why do you like JD so much? I think BABA is better long term, mostly because I've used it successfully to purchase material for a project and that experience was surprisingly positive. I'm curious why JD gets more attention it seems.

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I listed BABA as one of the big buys off 2350 S&P. It's popped nicely but JD has come only a few dollars off its bottom and has a breakout to give.

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Thanks for the reply!

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No worries. BABA is up 20% from entry with its nice move. JD is up 19.6% from entry. BABA is on a trend move after breakout, so I hedged it but JD hasn't broken out but I am confident it will. It a final China tariff resolution to ignite it but its coming.

oldarmy1 said:

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aggieland09 said:

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oldarmy1 said:

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aggieland09 said:

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Why do you like JD so much? I think BABA is better long term, mostly because I've used it successfully to purchase material for a project and that experience was surprisingly positive. I'm curious why JD gets more attention it seems.

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I listed BABA as one of the big buys off 2350 S&P. It's popped nicely but JD has come only a few dollars off its bottom and has a breakout to give.

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Thanks for the reply!

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No worries. BABA is up 20% from entry with its nice move. JD is up 19.6% from entry. BABA is on a trend move after breakout, so I hedged it but JD hasn't broken out but I am confident it will. It a final China tariff resolution to ignite it but its coming.

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Are you playing calls with JD? I was looking at Feb 1 or Feb 8 $26. Thoughts? I'm newer at this and actually almost bought a $25 Feb1 call last week

WestTexAg12 said:

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oldarmy1 said:

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aggieland09 said:

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oldarmy1 said:

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aggieland09 said:

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Why do you like JD so much? I think BABA is better long term, mostly because I've used it successfully to purchase material for a project and that experience was surprisingly positive. I'm curious why JD gets more attention it seems.

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I listed BABA as one of the big buys off 2350 S&P. It's popped nicely but JD has come only a few dollars off its bottom and has a breakout to give.

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Thanks for the reply!

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No worries. BABA is up 20% from entry with its nice move. JD is up 19.6% from entry. BABA is on a trend move after breakout, so I hedged it but JD hasn't broken out but I am confident it will. It a final China tariff resolution to ignite it but its coming.

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Are you playing calls with JD? I was looking at Feb 1 or Feb 8 $26. Thoughts? I'm newer at this and actually almost bought a $25 Feb1 call last week

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I'm on the stock now that markets bottomed but Feb 1 $25 would require that breakout to reach that soon. Could happen but I like more time even if a little higher strike to allow the break to happen because I expect $27.50 to come quick once it does and $30 on momentum follow through not surprising.

That guy that bought that huge BAC $28.50 call is doing alright.

oldarmy1 said:

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WestTexAg12 said:

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oldarmy1 said:

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aggieland09 said:

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oldarmy1 said:

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aggieland09 said:

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Why do you like JD so much? I think BABA is better long term, mostly because I've used it successfully to purchase material for a project and that experience was surprisingly positive. I'm curious why JD gets more attention it seems.

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I listed BABA as one of the big buys off 2350 S&P. It's popped nicely but JD has come only a few dollars off its bottom and has a breakout to give.

---

Thanks for the reply!

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No worries. BABA is up 20% from entry with its nice move. JD is up 19.6% from entry. BABA is on a trend move after breakout, so I hedged it but JD hasn't broken out but I am confident it will. It a final China tariff resolution to ignite it but its coming.

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Are you playing calls with JD? I was looking at Feb 1 or Feb 8 $26. Thoughts? I'm newer at this and actually almost bought a $25 Feb1 call last week

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I'm on the stock now that markets bottomed but Feb 1 $25 would require that breakout to reach that soon. Could happen but I like more time even if a little higher strike to allow the break to happen because I expect $27.50 to come quick once it does and $30 on momentum follow through not surprising.

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What do you look for in a chart or the stock that tells you that?

V still under $140. Not gonna last. I don't know whether to buy $140 calls for 50 cents to next Friday or hope for a pullback to load up next week?

Anyone looking at TLRY? Getting killed still maybe because of the IPO lockout expiration

ryanhnc10 said:

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Anyone looking at TLRY? Getting killed still maybe because of the IPO lockout expiration

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80 million more shares with gains from $17 are taking their payday!

oldarmy1 said:

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ryanhnc10 said:

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Anyone looking at TLRY? Getting killed still maybe because of the IPO lockout expiration

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80 million more shares with gains from $17 are taking their payday!

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Makes me wonder if some were smart enough to sell $300 covered calls out 4 months in another account. That or buy a big ol' Put.

I know there is zero chance I'd have sat on my hands when that thing hit $300. Heck some will recall I sold naked calls, something I VERY RARELY will do, when it hit those levels. The volume signature was a dead man walking mark.

Help a rookie out here. I'm looking to sell my first put to get my feet wet and I'm looking for a cheap stock to do it with. I know NIO has been talked about on here, and I notice that it's bounced off the $6 mark three different times now. NIO is currently at $6.71. I can get $0.80 for a 5/17 $6 put. What do you guys think?

kylewhitener said:

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Help a rookie out here. I'm looking to sell my first put to get my feet wet and I'm looking for a cheap stock to do it with. I know NIO has been talked about on here, and I notice that it's bounced off the $6 mark three different times now. NIO is currently at $6.71. I can get $0.80 for a 5/17 $6 put. What do you guys think?

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As long as you are good with owning NIO at $5.20 should it lose $6 then I like it. Generally you want to sell naked Puts closer in time because you will tie up the buying power required to own the shares during your naked Put.

I love NIO long term but we can't be sure how all the IPO buyers will handle the freeze lifted at 180 days in March. I would like to see it make a move to $8 ahead of the release and expect it to drop some but hold that $6 established major support.

If the stock hangs down here at or around these current levels I think it's quite possible for it to lose $6 on volume and flash to $5, or just below, before resetting its base for the long haul.

I will be watching closely as it approaches the IPO freeze lift and buy $5 Puts at closest expiration past that OR sell a covered call if at or above $8.

See how much fun it is when considering all the variables?

OA1, if you had $10,000 and wanted to hold the stock for one year or more which one(s) would you buy?
TIA

what say you said:

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OA1, if you had $10,000 and wanted to hold the stock for one year or more which one(s) would you buy?
TIA

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Are you looking for something relatively safe with a dividend or are you looking for something that has some volatility and has a chance at a decent breakout but could end up with a loss? His answer will likely come down to your tolerance and/or ability to take a loss. Is this money meant for a home purchase after the year is up?

If you've got the tolerance for some volatility, I would say JD. Still sitting near it's 52wk low and it keeps teasing its resistance trying to move past $25 and has been pretty good about staying between $21-23 the past month.

If you're just looking to park it with less risk, I would choose XOM.

IrishTxAggie said:

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what say you said:

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OA1, if you had $10,000 and wanted to hold the stock for one year or more which one(s) would you buy?
TIA

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Are you looking for something relatively safe with a dividend or are you looking for something that has some volatility and has a chance at a decent breakout but could end up with a loss? His answer will likely come down to your tolerance and/or ability to take a loss. Is this money meant for a home purchase after the year is up?

If you've got the tolerance for some volatility, I would say JD. Still sitting near it's 52wk low and it keeps teasing its resistance trying to move past $25 and has been pretty good about staying between $21-23 the past month.

If you're just looking to park it with less risk, I would choose XOM.

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$5000 in both. Win / Win.

cgh1999 said:

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IrishTxAggie said:

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what say you said:

---

OA1, if you had $10,000 and wanted to hold the stock for one year or more which one(s) would you buy?
TIA

---

Are you looking for something relatively safe with a dividend or are you looking for something that has some volatility and has a chance at a decent breakout but could end up with a loss? His answer will likely come down to your tolerance and/or ability to take a loss. Is this money meant for a home purchase after the year is up?

If you've got the tolerance for some volatility, I would say JD. Still sitting near it's 52wk low and it keeps teasing its resistance trying to move past $25 and has been pretty good about staying between $21-23 the past month.

If you're just looking to park it with less risk, I would choose XOM.

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$5000 in both. Win / Win.

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I like this...but don't pull the trigger Monday until we see how that blow off top pattern fares. Kudlow also has been tapping the breaks on the China progress, so JD directly can be impacted here.

Here is an example of how a covered call is utilized to make an ROI on a stock range bound. CDE is a gold stock I bought in my daughters 401k account. So of the 5000 shares owned at $4.42 I will sell 10 covered calls staggered over 4 months. That means 4000 shares are exposed to be called out if CDE pops resistance and runs, leaving her long term position at 1000 shares (my target long term position in her account).

So on the latest move up CDE had I sold the next 10 covered calls expiring Feb 15th. The premium decay on top of the stock pulling back has a current net profit of $360.54 with an additional $125 in premium to collect. Entering the stock at $4.42 if it were to be called out she makes the $558 for getting $5 per share on the call out + the $485 in total call premium.

I have 3 of the 4k covered calls in place staggered out to April with the January one expired Friday. So I sit and wait for the next move to $5+ and enter the covered call for 1000 shares.

Now this is why I love this strategy. This will be the second complete cycle of covered calls on 4k shares. She earned an average $434/k the first cycle or $1736 in premium earned against the $17680 in share value entered. By my math that is around 10% earned by, in effect, creating your own dividend on a stock. After this current cycle is completed that will be another 10%+. When your stock also has its own dividend you get a bonus.

I am a HUGE user of covered calls on range bound stocks, in addition to placing covered calls on shares that have made big breakout runs. Hope seeing the math (My notes in bold) and the below live example helps people realize how much money is to be made using this tactic.

CDE1915B5

CALL CDE 5.00 EXP 02-15-19
-10 (10 covered calls = 100 shares per call x 10 = 1000 shares represented)
$0.1250Last updated at03:59 PM ET (Remaining value of each option)
+$0.0150
+13.64%
-$125.00 (Remaining value based on current option price of 12.5 cents)
-$15.00
+$360.54 (Premium decay gains)
+74.26% (Percent of premium decayed gains)

oldarmy1 said:

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mavsfan4ever said:

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oldarmy1 said:

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Alternatively you could buy shares of companies and sell covered calls in the money which gives you a lower net entry or a higher payoff profit.

Bottomline - as I say - get money to work for you. Buy NFLX and sell a Feb $335 covered call for $23. You are going to get either $358 or net entry of $347 - $23 = $324.

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Hypothetically, what would happen in this situation if NFLX went up to $500? Just trying to understand the strategy a little better. Aren't you just capping your upside in exchange for making more of the stock doesn't move much?

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You'd only going to get $358 if NFLX were to keep on trucking higher. Frankly, if you're hoping to be long you want the stock to labor below your entry and work close to your covered call price. If it falls below the covered call $335 price then you'll keep the premium and still own the shares. If the stock continues to come off highs but not to the point of your $335 gets called out then you would either buy shares at the new current price, rinse repeat or hold. Perfect world would be for the stock to fall to $336 area so even if you get called out you keep the premium and can turn right around and buy the shares at $336. Then look for a bounce before selling your next covered call closer to the bounce price.

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Going to play devil's advocate to this strategy for the sake of discussion. The below article fairly accurately captures my thoughts. It seems that this strategy gives you some income or gains from the premiums if the stock goes down or is somewhat stagnant (below strike price) at the expense of giving up high upside returns.

I'm a poker player, so I always focus on expected value of all ranges of outcomes. If you play out the scenario a million times, I'd have to think your overall EV is lowered by the covered call strategy. In other words, you may be in a better spot most of the time because you will be collecting premiums. But the few times you miss out on the big jump in stock price will make your overall EV lower. So maybe you make more 90% of the time but missing out in the big jump 10% of the time will lower your overall EV of the situation.

If you are in the market for the long haul and don't need immediate returns or Income, and will have these situations come up over and over again, it seems like picking the choice with the overall higher EV is the smarter play. The covered call option seems analogous to a hedge that severely caps your upside, which may make sense in some instances but reduces your overall EV.

Thoughts? Am I missing something?

I'm on phone so sorry for any typos.

https://www.google.com/amp/s/seekingalpha.com/amp/article/4055775-sell-covered-call-options

mavsfan4ever said:

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oldarmy1 said:

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mavsfan4ever said:

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oldarmy1 said:

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Alternatively you could buy shares of companies and sell covered calls in the money which gives you a lower net entry or a higher payoff profit.

Bottomline - as I say - get money to work for you. Buy NFLX and sell a Feb $335 covered call for $23. You are going to get either $358 or net entry of $347 - $23 = $324.

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Hypothetically, what would happen in this situation if NFLX went up to $500? Just trying to understand the strategy a little better. Aren't you just capping your upside in exchange for making more of the stock doesn't move much?

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You'd only going to get $358 if NFLX were to keep on trucking higher. Frankly, if you're hoping to be long you want the stock to labor below your entry and work close to your covered call price. If it falls below the covered call $335 price then you'll keep the premium and still own the shares. If the stock continues to come off highs but not to the point of your $335 gets called out then you would either buy shares at the new current price, rinse repeat or hold. Perfect world would be for the stock to fall to $336 area so even if you get called out you keep the premium and can turn right around and buy the shares at $336. Then look for a bounce before selling your next covered call closer to the bounce price.

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Going to play devil's advocate to this strategy for the sake of discussion. The below article fairly accurately captures my thoughts. It seems that this strategy gives you some income or gains from the premiums if the stock goes down or is somewhat stagnant (below strike price) at the expense of giving up high upside returns.

I'm a poker player, so I always focus on expected value of all ranges of outcomes. If you play out the scenario a million times, I'd have to think your overall EV is lowered by the covered call strategy. In other words, you may be in a better spot most of the time because you will be collecting premiums. But the few times you miss out on the big jump in stock price will make your overall EV lower. So maybe you make more 90% of the time but missing out in the big jump 10% of the time will lower your overall EV of the situation.

If you are in the market for the long haul and don't need immediate returns or Income, and will have these situations come up over and over again, it seems like picking the choice with the overall higher EV is the smarter play. The covered call option seems analogous to a hedge that severely caps your upside, which may make sense in some instances but resuces your overall EV.

Thoughts? Am I missing something?

I'm on phone so sorry for any typos.

https://www.google.com/amp/s/seekingalpha.com/amp/article/4055775-sell-covered-call-options

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Remember the initial premise was for people who feel paralyzed after a big drop and feel they missed the bottom. It was a good way to get capital to work for you that otherwise was sitting making nothing,or very little.

The other uses after big moves, like Netflix, before earnings will still be a go-to approach. That or a Put, but after a $50 move up I went covered calls.

But if someone does not think they can time the market, it's accurate to say that the covered call position reduces your overall EV, correct?

Thanks for the quick response.

Thank you for your thoughts! Maybe I'll sell the 2/15 $6 for $0.23 instead. Take the IPO lock up period thing out of the equation and get my buying power back quicker, like you said.

Thanks again!

mavsfan4ever said:

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But if someone does not think they can time the market, it's accurate to say that the covered call position reduces your overall EV, correct?

Thanks for the quick response.

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It certainly will if the stock breaks out above resistance. Therefore you might do like the approach used on my daughters account and use covered calls on non-longterm holdings. Then again, lets take NFLX as a higher value stock. I sell a $350 covered call as the stock is pushing above $353 out 2 weeks for $35 premium. That would be a price of $385 netted if the stock was above $350 and was called out.

That means if the stock was below $385 I could step in and buy the stock back at a net lower holding price. Even if the stock approach $385 into options expiration what have I actually lost? I could still buy it without having missed a penny of gains, but likely will always net a higher total gain.

When we are talking gains versus losses it sure is a better conversation!

Thank you OA and Irish

oldarmy1 said:

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I know what you're thinking. Blow off top?

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Yup, blow off top. Gonna have a decent pullback for some more easy $

Let us know your locks OA!