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Is my covered call strategy reasonable?
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Hi all,

I am new to covered calls, I just had my first one expire worthless on Friday. I would like some advice on whether you think my strategy is reasonable:

  1. I only do CCs on 20% of my shareholding, so even if I get assigned I still have 80% of my shares intact.
  2. I only choose a strike price I would be happy to sell for. Even if I get assigned I still get a nice profit.
  3. I do weeklies with a profit probability (for the buyer of the cc) of less than 15%.

The aim is to sell 10 contracts every week for a premium of $1000 so about $4000 per month on a stock I am very familiar with and I know when the price moves and why.

Can I rely on the profit probability given by my broker of do I need to learn to read the Greeks?

Do you have any advice that could improve my strategy?

Thanks

Comments
  • only sell a CC on up days, not down days

  • if this is a highly volatile stock like TSLA, it will go on a tear (in crease 50% in days/weeks) once or twice a year. If that happens stop selling, until the price hasn't touched the upper daily bollinger band for 2-3 days.

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3 months ago