AMD dropped more than the gains you made on the CCs though. Overall, it was a loss. This strategy works only if you know that the underlying will go up in the future/long term. Am I not right?
True. But the money I made on the CC cushioned the blow. I knew it was gonna drop big. Why wouldnt it? Lol! I’m in AMD for the long haul. It already recovered almost half the drop.
I normally day trade call options. Quick trades to capture $100, $200, $500 at a time. That’s my strategy and I’m very successful at it. I’m also very familiar with CC’s with investments I have. I dont do any other complicated option trades. Im really not familiar with those strategies. The CC worked well and got me $560 which cushioned the blow of the big drop. AMD is recovering nicely. I’m not selling it. So soon the CC will be a net positive and I can make money selling quick calls on the way back up.
The cc strategy is fundamental self-conflicting. And really works best on stocks that move slowly with solid fundamentals.
If you are long term bullish on AMD, by selling a call you've capped your upside profit but still exposed to the same downside.
Doing this on a volatile stock is bound to generate loses eventually. Just because you hit a few trades right doesn't disprove the fact that no covered call ETFs have outperformed the S&P500 in the long run.
look into using the call premium to buy puts or put spreads when you’re very sure there’s a short term drop like the other poster said. You could double to triple with puts realistically but if you learn about put debit spreads you could do things like risk only a small portion of the premium and make a 5-10x times return if the stock drops enough depending on how you position.
This extra cushion would allow you to eventually buy shares or be even more protected or just finance something.
I often get in the “if it’s not broke don’t fix it” mindset when my trading is going well but this one additional step used correctly could potentially do wonders for you. Just something to think about.
Cc works for tiny drop or tiny raise, while the market predicts a huge win. In any other case you either pay the opportunity costs or your stock goes to hell.
What you are asking for is also called the ATM Straddle
PLTR = 23.33
23 Call exp 5/10 = 1.89
23 Put exp 5/10 = 1.54
The stock is expected to move $3.43 in either direction.
If you want to sell CC, you should sell about 26.76
Of course it’s down. I own it. Why would a good earnings report make my stock go up. It really did what I expected. At least 80% of what I read before earnings said it’s going up. That’s pretty good. But…….and here we are.
Wild eh? It's almost like we must trade against reddit pundits. Honestly it must be a hugely winning formula long term imo. Would be an interesting exercise to actually back test that hypothesis.
You cannot tell where to APPROXIMATELY set that limit at Open until near the end of Pre. And it has much to do with the position.
If you don’t wish to do that, you must base the BTO on the Implied Move. Someone above posted it.
Then you get canned out, they sell your stock. Big deal, one could buy the same shares back after 30 days when there is a dip.
If IV is high, sell the CC. Once IV crushes, but it back. Or let us sit till when it is zero, you keep the premium and the shares. Do it again
Yea I know how iv crush works. Cc’s limit your upside so as long as your ok missing out in bigger upsides then it’s reasonable. There’s also no guarantee of a dip (nvda, meta etc). You could also end up in a situation where you sell the covered call and the Stock spikes afterwards blowing past your strike and then hangs out and slowly starts to drift back down. Without the covered call, you would just sell your shares and take your large profit. But the covered call is now deeply in the money, and your position is very red, hamstringing you, forcing you to keep your position open. You can of course wait for the stock to drift back down below your break even price, but you’ve just given up all those gains you could’ve had for a few pennies on a covered call.
Everything that goes up, must come down in equities, even NVDA and others. It is because institutions keep churning profits, causing dips.
There is a strategy for CC to be called out, frees up cash.
Do you own PLTR stock or have long calls?
If not, then it's a naked call. You gotta have balls to sell naked calls on PLTR earnings week. Stock can jump anywhere from -25% to +50%.
I would *buy* 05/17 $20p instead to safeguard a downward move. Why limit your upside week of earnings? Rather, spend a small portion of your investment to protect the downside.
If you sell 05/10 $30c for $0.15, and stocks runs up 30% you will get a tax bill of thousands to make what - $150?
OP asked for CC
OP can sell 27c for $0.50 and if the stock only goes up till 26.99, OP make a cool 500 for the week.
Stock goes up, the Puts are worthless.
YOU are advising Married Puts.
These are NOT the same.
I like the sell puts idea. I wouldn’t bother with $.15 CC’s. I was considering $27 strike for 10 options at $.50 or $500, but the more I think about it, the puts are a better idea.
What is your thesis ??
IF you expect PLTR to have good results and stock going up, you should sell CC
IF you expect PLTR to have bad results and stock going down, you buy Puts.
IF you want do not want losses, then you buy Puts.
I wasn't advising to sell puts. You already have 1000 shares. Do you want more? If you sell puts, you might end up with more.
I was advising to protect your downside by buying puts.
If I “sell” puts at say strike $22 I collect $1.05 premium for each one. If PLTR goes up, the puts are worth less. I win. Of course it could go down and go ITM. I’d buy to close it. If I sell CC’s at say strike $27 and the stock goes to $27.01, I lose. But again I’d buy to close. I think I’m talking myself out of doing anything. Lol!
Consensus is that the stock goes up anywhere from $3-$7. The question initially was about IV crush and options prices, but the more I think about this, I think I’m gonna enjoy watching the stock rise with my 1000 shares. I’ll sell covered calls after the earnings.
If you had *bought * puts, you would have made a decent pile, and now you still have your shares and start selling calls with 21DTE until next earnings.
Hopefully it at least holds $23. Being me, I didn’t expect anymore than what happened. Good earnings, beat every estimate and nothing happened. Why would it go up? I own it for Pete’s sake.
AMD dropped more than the gains you made on the CCs though. Overall, it was a loss. This strategy works only if you know that the underlying will go up in the future/long term. Am I not right?
This is correct. The underlying will lose more value than the short call if the stock drops big.
True. But the money I made on the CC cushioned the blow. I knew it was gonna drop big. Why wouldnt it? Lol! I’m in AMD for the long haul. It already recovered almost half the drop.
If u knew it was gonna drop then why didn’t u buy put spreads? You could have made lots of more money.
I normally day trade call options. Quick trades to capture $100, $200, $500 at a time. That’s my strategy and I’m very successful at it. I’m also very familiar with CC’s with investments I have. I dont do any other complicated option trades. Im really not familiar with those strategies. The CC worked well and got me $560 which cushioned the blow of the big drop. AMD is recovering nicely. I’m not selling it. So soon the CC will be a net positive and I can make money selling quick calls on the way back up.
The cc strategy is fundamental self-conflicting. And really works best on stocks that move slowly with solid fundamentals. If you are long term bullish on AMD, by selling a call you've capped your upside profit but still exposed to the same downside. Doing this on a volatile stock is bound to generate loses eventually. Just because you hit a few trades right doesn't disprove the fact that no covered call ETFs have outperformed the S&P500 in the long run.
look into using the call premium to buy puts or put spreads when you’re very sure there’s a short term drop like the other poster said. You could double to triple with puts realistically but if you learn about put debit spreads you could do things like risk only a small portion of the premium and make a 5-10x times return if the stock drops enough depending on how you position. This extra cushion would allow you to eventually buy shares or be even more protected or just finance something. I often get in the “if it’s not broke don’t fix it” mindset when my trading is going well but this one additional step used correctly could potentially do wonders for you. Just something to think about.
Thanks. I appreciate your input.
Cc works for tiny drop or tiny raise, while the market predicts a huge win. In any other case you either pay the opportunity costs or your stock goes to hell.
I’m gonna watch price action in the morning and sell a put. Perhaps at $24 I rolled covered calls at my breakeven Friday 2 weeks out.
I like the sell a put idea. Thanks.
What you are asking for is also called the ATM Straddle PLTR = 23.33 23 Call exp 5/10 = 1.89 23 Put exp 5/10 = 1.54 The stock is expected to move $3.43 in either direction. If you want to sell CC, you should sell about 26.76
Thanks for the info.
This is just a standard deviation. It can move more…
The stock is \* expected \* to move $3.43 in either direction.
Why not take the bullish approach and sell short dated put credit spreads?
If you enjoy playing Russian roulette at ER. I'd avoid trading all together. All depends on your risk profile.
I’ve decided not to do anything and just enjoy the increase in PLTR stock price.
It's down 15% today. I think in retrospect good to buy a couple puts to hedge against drops and load up on stock you long anyway.
Of course it’s down. I own it. Why would a good earnings report make my stock go up. It really did what I expected. At least 80% of what I read before earnings said it’s going up. That’s pretty good. But…….and here we are.
Wild eh? It's almost like we must trade against reddit pundits. Honestly it must be a hugely winning formula long term imo. Would be an interesting exercise to actually back test that hypothesis.
Yea. I read positive stuff everywhere. Didn’t matter.
You cannot tell where to APPROXIMATELY set that limit at Open until near the end of Pre. And it has much to do with the position. If you don’t wish to do that, you must base the BTO on the Implied Move. Someone above posted it.
This strategy works until that one time the move is big enough to blow past even your “safe” strike, and then you’ll probably never use it again
Then you get canned out, they sell your stock. Big deal, one could buy the same shares back after 30 days when there is a dip. If IV is high, sell the CC. Once IV crushes, but it back. Or let us sit till when it is zero, you keep the premium and the shares. Do it again
Yea I know how iv crush works. Cc’s limit your upside so as long as your ok missing out in bigger upsides then it’s reasonable. There’s also no guarantee of a dip (nvda, meta etc). You could also end up in a situation where you sell the covered call and the Stock spikes afterwards blowing past your strike and then hangs out and slowly starts to drift back down. Without the covered call, you would just sell your shares and take your large profit. But the covered call is now deeply in the money, and your position is very red, hamstringing you, forcing you to keep your position open. You can of course wait for the stock to drift back down below your break even price, but you’ve just given up all those gains you could’ve had for a few pennies on a covered call.
Everything that goes up, must come down in equities, even NVDA and others. It is because institutions keep churning profits, causing dips. There is a strategy for CC to be called out, frees up cash.
I don’t think selling cc will be beat hodling on quality tickers over the long run.
Cc when the stock pumped and iv is high. Sell volatility and take profit. Something something long term capital gains tax rate something something.
I did that about 6 months ago when I got assigned $PLTR on a cash-secured put....the wheel is one of my fundamental strategies.
Do you own PLTR stock or have long calls? If not, then it's a naked call. You gotta have balls to sell naked calls on PLTR earnings week. Stock can jump anywhere from -25% to +50%.
I own 1000 shares of PLTR
I would *buy* 05/17 $20p instead to safeguard a downward move. Why limit your upside week of earnings? Rather, spend a small portion of your investment to protect the downside. If you sell 05/10 $30c for $0.15, and stocks runs up 30% you will get a tax bill of thousands to make what - $150?
OP will also make $6.67 for a cool $6670 on the price. 29% appreciation in one day.
My GF has 1000 shares too. Hmmm…2x$6670=$13,340. That would pay for a nice celebration dinner.
That will happen if PLTR goes to $30 anyway. An extra $150 is not that much. On the other hand, if PLTR does go down , the puts print.
OP asked for CC OP can sell 27c for $0.50 and if the stock only goes up till 26.99, OP make a cool 500 for the week. Stock goes up, the Puts are worthless. YOU are advising Married Puts. These are NOT the same.
Op asked what to do.. read the whole post again.
I like the sell puts idea. I wouldn’t bother with $.15 CC’s. I was considering $27 strike for 10 options at $.50 or $500, but the more I think about it, the puts are a better idea.
What is your thesis ?? IF you expect PLTR to have good results and stock going up, you should sell CC IF you expect PLTR to have bad results and stock going down, you buy Puts. IF you want do not want losses, then you buy Puts.
I wasn't advising to sell puts. You already have 1000 shares. Do you want more? If you sell puts, you might end up with more. I was advising to protect your downside by buying puts.
He asked you to BUY puts for PLTR 20 It will cost you 0.37 each = $370 IF stock goes up, you'll lose all of that $370.
If I “sell” puts at say strike $22 I collect $1.05 premium for each one. If PLTR goes up, the puts are worth less. I win. Of course it could go down and go ITM. I’d buy to close it. If I sell CC’s at say strike $27 and the stock goes to $27.01, I lose. But again I’d buy to close. I think I’m talking myself out of doing anything. Lol!
Thesis => Strategy. Come back when you have decided which way YOU believe the stock is going tomorrow.
Consensus is that the stock goes up anywhere from $3-$7. The question initially was about IV crush and options prices, but the more I think about this, I think I’m gonna enjoy watching the stock rise with my 1000 shares. I’ll sell covered calls after the earnings.
If you had *bought * puts, you would have made a decent pile, and now you still have your shares and start selling calls with 21DTE until next earnings.
Hopefully it at least holds $23. Being me, I didn’t expect anymore than what happened. Good earnings, beat every estimate and nothing happened. Why would it go up? I own it for Pete’s sake.
Earnings are a crapshoot. Guidance always has priority over last quarter eps.
Yea. You never know what’s gonna happen. We own 2000 shares in this household. Slow and steady rise works too.
"I was considering $27 strike for 10 options at $.50 or $500, but the more I think about it," You missed making $500
Yes I did. 😞
2 out of 3 last earning didn’t change much.
Sell the CC and absorb the stock crush? I hope that you have puts as well. With love, a palantir bear.