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I own 100 UAL shares. I sold a $37 call before the vaccine news ....for $220 ...... its now priced at $620 ....... The shares are trading at $42 So my thought is ........... If I cover myself ....... Ill have to buy to close at a cost of $620. I already received $220. So a cost of $400 to close the option. But .... if I immedaitely sell my position ..... I collect the full $4200 versus the the $3700 ..... so a $500 gain. So overall puts me $100 ahead doing it this way........ Right/wrong ? thanks

@Marco - thanks - that makes sense

Thanks. What does the '50 delta' mean though --- sorry ---- that lost me.

Thanks @Kim @vitalsign0 @vitalsign0 "Married Put = buy 100 shares of stock + buy 50 delta Put 90 DTE" Do you mean buy 50 units of put option (i.e 5000 stock total control) ........ at 90 days expiration out ?

@Kim Thanks !! How is the CC P/L calculated ....... eg at line May 18 - that looks like what we are saying is stock went from $572.98->$530.38 So a loss of $42.60. But we received $28.77. So a paper loss of $13.83. So I think I get that from a monthly trade perspective ....... looks like holding the stock was better. But I *think* in my scenario Im looking more for income stream on a longer term basis. meaning. Normally I'd just buy a stock like PSX for income (dividend) at a certain entry point and accept the up/down volatility ..... and calculating that at sometime in future I'll sell for breakeven or higher on stock price ..... plus my 7% dividend. So lets just go with break even and a yearly 7% return. but if I sell a longer dated covered call I have a few options. 1) If stock goes down ....... I'll receive the option strike gain as the option will expire worthless. Now making my cost basis even lower. Rinse and repeat. Still collect my 7%. 2) If stock goes up. The option gets called. I collected (in my example) an 20%-30% return over the period of the year (annualized). Sorry - think I am just rehashing what your saying - which is your limiting your upside and your downside has no limit. That's what the premium is for. But if Im comfortable owning the stock anyway ...... then locking in a worst case 20% return on upside seems good. Downside risk to me is basically the same in either scenario (options or just stock) => 0. Not looking to trade options apart from a hedge/defined income. Sometimes I will sell the covered call on a stock I want to own anyway based on technicals ..... stock looks overbought etc ....

@Kim Thankyou Sir !! I dont have a SA Premium account - just regular - so its blocked.

@Kim Thanks kim Sounds like I understand it correctly. I guess it depends on how you define "loss". In your scenario ....... I have lost out on the potential gain of $50 ($5000 on 1 option). But from my viewpoint ..... I bought the stock at $56 ...... I sold two options at $5.60 ($560x2) or $1120 ..... and I still own the stock and collected the dividend. Thats over a 20% return ...... and not much risk except the loss of bigger gains. I can live with only 20% return ........

So a relatively newbie - not looking to get into complex option trades --- just using mostly for hedging/income. Wanted to understand what the downside of this approach is ? i.e Am I missing anything. ================== What is the downside to this option trade ? I cant really think of any except... 1) Stock goes to 0 - same as a normal stock ownership so no difference. 2) Stock doubles - you limited your upside. PSX - trading at ~$56, yields 6.5%. The Feburary 19 2021 (150 days) 57.50 call option is selling for around $5.60. (well two days back when I first looked at it) So that to me means ..... If you bought 100 shares ... and sold 1 option at that price you would; 1) Collect 10% or $560 on your $5600 investment for 161 days. 2) Collect 161/365 days worth of dividend @6.5% ~ 2.87% 3) Collect if option is excised $1.50 ($57.50 call $56 stock price) also . 2.67% So total for 161 days approximately 10% + 2.87% + 2.67% => 15% for less than half a year. Or over 30% for the year. Whats the downside ? Except what I mentioned above. Any fault in my logic ? Looking to hedge a little bit of risk but stay in market.