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Showing content with the highest reputation on 02/16/2023 in all areas

  1. 2 points
    @jvo First a general thought or two... I started trading options because I was looking for an income stream. I had read the hype and it all sounded so good and easy... and such a sure thing. I worked my way up through plain long calls, spreads, etc. and at some point started communing with the SteadyOptions family (for whom I have the highest praise!). Most of my early years were in the bull market of the last decade, which *did* make it easy to turn a profit regularly. I started calculating how quickly I could become "rich". What I would occasionally discover was that things would go wrong in ways that I had not expected. That's a major "gotcha" in exotic strategies like options trading. Another major 'gotcha' was my own biased thinking. With each new strategy, I tended only to look at the winning numbers. After several years of trying different strategies, one thing I've become convinced of is that options trading may be fun and may be profitable AT TIMES, but it is by no means something I can count on for steady income. Certainly not income that I depend upon (like for rent and groceries). In fact, I have taken it a step further and decided I should never open an options trade with any money that I cannot afford to lose. Now to more directly reply to your question on covered calls... One of the strategies I've tried is known as the options "wheel" strategy. If you're not familiar, Google will point you toward an education on the subject. It is a bit more 'hands off' than the SO methodology (like you're looking for). Part of the wheel strategy involves covered calls. The 'gotcha' I found on this is when you are trying to place a covered call and the market price of your stock drops and stays down (or worse, keeps going down further). [Please note, that the wheel is not necessary for what I'm describing, it's just been my experience that I'm relating. A plain covered call can play out the same way.] When you own a stock (or ETF whatever), you've paid some specific price for it. In order not to lose money (Buffett's #1 rule), your call option strike must be no lower than the price you've paid for the stock in the first place. Otherwise, if you are assigned, your shares will be called away at a loss. (Yes, I know you can offset your stock price with your call premiums, but let's keep things simple.) It doesn't take much of a price swing to put you in a situation where you cannot sell a covered call at a reasonable premium (or maybe at all; and sorry but I don't consider $0.01 reasonable) at the strike that matches what you paid for your stock. All those juicy premiums at 20-30 delta taunt you. And it's really easy to drop your resolve and open a contract that has the ability to take several thousands of dollars out of your account overnight (literally -- you'll wake up the next morning and it will be gone). I've enjoyed the wheel and have made good money off of it. I've also avoided losing money (okay, well mostly 🙂 ). The way I've avoided losing money is painfully boring for an excitable options trader like me -- I stay on the sideline, waiting for favorable conditions to return. Sometimes for months (potentially years even (or in the worst case, never)). That certainly is not an income stream in my book. The only way (again, without losing money) I've figured out how to get out of a stuck position (ie no income stream) like I've described is this: Set aside the trade that has become hopelessly OTM until (I mean IF) it recovers, and start a new trade (ie buy more stock and sell calls against that). You will once again have an income stream. Of course, to do so requires bringing a fresh wad of cash into the game. That's something that most of us can only do so many times. Especially using only the extra money that's just hanging around and that we can afford to lose.
  2. 1 point
    @poseidolginko done for both symbols. Thanks for the headsup. There is still some kind of 'data drain' with some symbols I could not yet completely track down.
  3. 1 point
    I would recommend reading Debunking The "Trading Options For Income" Myth There are many crooks that will make you to believe that you can generate a consistent income trading options. Options trading is NOT an income producing strategy. If you want a consistent stream of income, buy dividend stocks, rental properties, bonds etc. When you are trading options (or any other instrument), there will be losing weeks, losing months and sometimes even losing years, no matter how good you are. If you see someone promising you a consistent stream of income from trading or investing, they are probably doing something similar to Bernie Madoff. Also, trading is a business. As in any business, prices are involved, and our profitability of success will always depend on our ability to get good fills. Every business revolves around this cost equation... If getting good prices was so easy, there wouldn't be any markets/any business. So there is no such thing "trades that are not as dependent on entry and exit prices" Sorry to be blunt, but I always tell people the truth, and not what they want to hear. If you want to succeed in trading, you must put time and effort. Otherwise just buy index funds.
  4. 1 point
    For the record I didn't do thorough research on covered call ETFs, but a few big ones I checked were beat by the index in the long run. From that I draw a conclusion that if professional fund manager cannot beat the market selling calls, then I shouldn't try to do it either. Again, may be I was unlucky to choose wrong ETFs and there are some which are doing well. But that was my conclusion after quick research.
  5. 1 point
    For the record @jvo, I've been doing pretty good for 4 years now, though last year was my first loser. Almost 3 of those years have been on SO. And I'm an uneducated (literally) mechanic, if I can do this, I think most people can. The real killer is emotions and the desire to take the short cut to the pot of gold at the end of the rainbow. Even now, I have to strangle the little trading devil on my shoulder periodically and last year was a loser because I got greedy and changed some things. SO is the only legit trading website that I know of, I'm sure there might be some others but I haven't found any, and SO is very cheap, comparatively.
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