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JimbertGuest
Heather, what are your thoughts on covered calls? They seem to be fairly low risk, at least in a bull market.
I have started doing them with excellent results. My strategy has been to sell a call as close as possible to right at the money. That results in about the same yield, whether the call is executed or not. Of course if the call is not executed, you still own the stock and have an unrealized capital loss. That hasn’t happened to me yet, but my plan, at least in a bull market, would be to hold onto the stock and sell another call on it. If I would decide to sell, the net capital loss, if any, would be minimized by the money I was paid by selling the call. But with this strategy in a bull market, I would expect most of my calls to expire in the money with the stocks being sold.
I have been selling calls on Nvidia, with expiry dates 11-23 days out and if annualized, my yields have been (or will be) from 60-151%. (That assumes any particular call would immediately repeated with the same expire period. Not really possible I know, but ……) NOTE: Past results are no guarantee of future results. Especially since I have only sold 4 calls, 2 already expired and 2 expiring the end of the month. LOL
Yields could be considerably higher if selling calls out of the money, the more out of the money, the higher the yield, assuming the stock expires in the money. However, if they expire out of the money, the yield would be much less. The reverse is true if selling calls deeper in the money. That’s why I sell them at the money. the yields are balanced.
– Jim
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