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WMT Covered CallBeen holding this trade for a few weeks now. This is my first post related to options trading. I'm using the lines to show a visual of how selling a Call has helped create a range of profitability and risk management. GREEN LINE - Max Profit - This green line is in relation to the original share price entry point, the Call strike price, plus any premium collected. YELLOW LINE - Strike Price - I will adjust this often in an effort to continue to manage the risk, while maximizing profits. I try to stay under the stock price to maximize risk management. RED LINE - Break-Even - This line is a proposed break-even price of the covered call. It is a linear sloped line, but is not accurate. This line give a rough estimation of what my break if is based on each expiration date. PINK LINES - rough projections based on the last Max Profit and Break-Even potential. I'm using this to show what might potentially happen to the range, the longer I hold on to this trade.
NYSE:WMTLong
by oldinvestor
THE MONTH AHEAD (IRA): BROAD MARKET OVERWRITING IN QQQMy IRA is a basic Boglehead setup, along with some little tweaks. Primarily consisting of SPY, TLT, EFA, and IYR covered calls, it's about as Plain Jane as one can get, although I've got some acquisition-oriented short puts hanging out there in XLU, XLP, and HYG. As any covered caller or short putter knows, these setups are going to be long delta all the time, so every opportunity you can take to shorten that delta can work to your advantage, smoothing out market gyrations' effect on your P&L, and potentially more rapidly reducing your cost basis over time. Conversely, attempting to shorten delta can bite you in the ass if you get overly aggressive, with the end result being a bunch of monied covered calls. As I've pointed out on occasion, however, having monied on may not be a bad thing, depending on how risk adverse you are and how much tolerance you have for big swings in the market. In this particular cycle, I'm looking to add short delta on strength, primarily to flatten the net long delta in my SPY position, in which the portfolio is overweighted. I've already done some of this on previous strength, with a laddered call diagonal setup that overwrote calls in the September, December, and March cycles and capped off buying power effect with some cheap long calls out in March. (See Post Below). This will also indirectly hedge off some of the EFA long delta, as it, too, is broad market, and is likely to experience a sell-off if SPY does, given its .71 3-month correlation with SPY, and -- to a lesser degree -- IYR's long delta, since it is less broad market correlated (.41 3-month with SPY). Here, I'm looking to do some more delta cutting, but am looking instead at QQQ's, which appear to be slightly stronger than SPY at the moment. Since the broker treats these overwrites as "standalone trades" for purposes of margin, it makes little difference if I shop for short delta directly in SPY versus another broad market instrument or, in fact, any underlying that is strong relative to the broader market, at least from the standpoint of buying power effect. However, I generally like to keep apples with apples and oranges with oranges, so prefer overwriting broad market with broad market, and not single name, although single name is certainly a viable option to the extent that it's closely correlated with the broad market. Generally speaking, after all, the entire market becomes closely correlated in a sell-off, so it is unlikely to make a huge difference if I overwrite in QQQ's at or near all-time-highs, or in (insert stock symbol here) that is at all-time-highs and is closely correlated to the broad market. As before, I'll be looking to ladder out, selling similarly delta'd short calls with a set of back month long calls put on for cheap to bring in buying power effect, ideally with QQQ's touching or breaking those all-time-high's at 195.50 or so. Preliminarily, I'd be selling the December 201's, the March 208's, and the June 213's (all 20 delta in their respective expiries), and buying 3x the June 238's for around -50 worth of delta cutting and a net credit of 5.80/setup or so. Alternatively, I can "cut for cheaper" with a long put diagonal, buying the 90 delta 218 out in June and selling the 30 delta 180 in November, for a much smaller buying power effect and -60 delta's worth of cut per contract. Naturally, I need the QQQ's to get back to those all-time-high's first. If they don't, I'll re-evaluate ... .
NASDAQ:QQQ
by NaughtyPines
2
Covered Strangle for Dividend Capture Enhancement (75% prob)Bought 100 RCL for 118.25 Ex-Dividend is tomorrow and dividend is .70, so If I have the stock by tomorrow I will receive the dividend. To enhance the trade I also Sold the 115/119 Strangle for an additional $1.1 with 3 days to expiration (That's how long I will be in this trade) Max win would be $185 for the covered strangle plus $70 for the dividend = $255 My break even counting the dividend is 116.45 So I have 1.5% protection to the downside. This gives us about 75% probability to make money
NYSE:RCLLong
by AlexanderGotay
HPQ Covered Call This covered call play in HPQ is partially an earnings play as well as longer term investment into October. HPQ reports earnings tomorrow after the bell, and currently has an inflated IV rank of 69%, IV 32.9% At the moment, the expected move is +/- 0.9 or 4.7%. Most of the previous 8 earnings reports the stock moved a wider range than this. (Half gaining and half losing). The October 20 covered call at the 32 delta, $20 strike filled instantly for 18.70. This gives a max profit of $130 above $20 by expiry or total return of 6.95% over cost of 18.70. If the call expires worthless, the call premium returns almost 2% on the current stock price (at 59 D.T.E. yields 12% annualized) and I'll aim to continue selling calls against it. With a stock price of 19, a round lot of the stock uses a small part of the portfolio buying power. HPQ as a stock has been improving lately, and some of the fundamentals I'm bullish on are: - Free cash flow yield of 5.4% should support the price of the stock - 2.85% dividend yield (payout ratio under 50%) should support the price of the stock. - Trading below it's year end fair value of $22 based on 1.63 operating E.P.S. and 5.5% long term growth. - Average analyst 12 month target of 21.50, with favorable ratings of 4/5 by CFRA & outperform by C.S. Trefis suggests 'fair value' at 18. - Technically the chart may also suggests a bullish cup and handle pattern. Additional Notes: - Alternatively I considered selling the 18/20 strangle at 30 deltas for $78 credit. This only would have used $555 buying power. - Earnings plays are often considered like a 50/50 coin toss. At a risk 1 : win 1 ratio, the stock must remain above 17.46 by expiry.
NYSE:HPQ
by dime
WFT COVERED CALL IDEAWith covered calls, I look for cheap underlyings with high implied volatility rank/high implied volatility and setups that will produce at least a 10% return if called away at the short call strike. WFT fits the bill, with a rank of 72, an implied of 84, and a 13.06% return if called away at the nearest out of the money strike. Here's the setup: Buy 100 shares WFT at 8.52 Sell 1 Feb 19 9 short call Entire Package: 7.94 ($794) Max Profit: (If Called Away at 9) $106
WLong
by NaughtyPines
DAL Long - Bull Flag ConsolidationThe idea here isn't very difficult to understand. DAL has made a run up from $35.51 on August 8th, where we saw a bounce off the 150EMA, a personal favorite area to get long for me, especially looking at the weekly chart for this. Anyways, from the top down: 1) Bullish RSI Holding 60 Support 2) Established Uptrend - Long Term 3) Bounce off 150 EMA 4) Long $4.46 move straight up through all EMA(8/21/50), through resistance, and consolidating above. 5) Broken Downtrend 6)Weekly Uptrend Is Beautiful - Right At EMAs (8/21) (My Screen Is Too Small To Pull Up Both Simultaneously) Cons: 1) MACD Is Positive 2) Momentum Tapering As We Consolidate I like the chart, and like what I see. I'm getting long here. Possibly with a covered call, but maybe something else. Not sure what other plays are available with such low volatility, but the verticals and diagonals are getting old.
NYSE:DALLong
by TheProfitcy
PEIX PACIFIC ETHANOL SLOW STEADY ATTEMPT TO WAVE ITS WAY TO ATHIF A COMPANY HAS CONTINUED GROWTH IN A CHANNEL WITH FLAWLESS STRENGTH AND A NICHE MARKET FOR A PRODUCT USED AS NECESSITY IN AN ECONOMY STRUGGLING TO FIND PRODUCTION YET PRODUCE OIL AND GAS WHICH IN TURN GASOLINE RISING AT THE PUMP AND CORN BASED ETHANOL OUR ATTEMPT TO GO GREEN IN A DIRTY BLACK FOSSIL FUEL LOL. THE GOVERNMENT MANDATES A PERCENTAGE IN EACH GALLON OF GAS AT THE PUMP MEANS CONTROLLED COMMODITY THAT EQUALS CONTROLLED GROWTH IN PRICE BY DEMAND AND INFLATION WILL LEAD TO HIGHER PROFIT MARGINS THE STOP I WOULD USE IS A TRAILING DAY BY DAY XYB NUMBER WHICH IS HIGHER THAN THE INDICATOR GAVE US OUR BUY WINDOW IT WILL ALSO GIVE US A SELL STOP TO ENSURE BREAKEVEN HOWEVER I WOULD PLACE IT BELOW THE XYB BY A DIME EACH DAY. TO ENSURE THAT THE PROFIT IS MAXIMIZED I WOULD USE THE WXT DAILY ONLY ON A CLOSE ON OR WITHIN FIVE CENTS OF THE HIGH OF DAY WITH LOW VOLUME ESPECIALLY. YOU COULD THEN BUY BACK AT 8-10EMA IF IT HOLDS THERE AFTER A TWO TO THREE DAY SELL OFF YOU COULD WRITE CALLS ON IT IF IT CLOSES ON WXT THAT DAY AT CLOSE INSTEAD OF SELL AND SHORT TERM EXPIRATION SO YOU COULD BRING MOST PROFIT OFF COST BASIS INSTEAD OF A SWING TRADE DEPENDING ON POSITION SIZE THIS USUALLY OCCURS IN THREE DAYS OR SO FOR SELL OFF TIME FRAME TO SUPPORT LARGER BLOCKS SELL 70% OF POSITION THEN BUY BACK ON EMAS SO THATS THREE OPTIONS ON HOW TO MAXIMIZE TRADE 1LONG TERM FOR ALL TIME HIGH YOU WRITE CALLS AT WXT ON CLOSE 2 SWING TRADE SELL OFF 70% OF POSITION WRITE CALLS ON 30% THEN BUY BACK ON 8-10 EMA SUPPORT HOLDING FOR DAY OR TWO THEN BUY BACK ON UPTICK DAY COVER CALLS THEN REAVG AND REPEAT TRADE AS LONG AS NECESSARY 3 PURE TRADE SELL OUT IN FULL AT WXT ON FOLLOWING DAY ON DOWN TREND THEN FULL BUY BACK ON STABILZATION AT 9 EMAS REPEAT AS MANY TIMES AS REQUIRED TO CAPTURE HIGHEST PROFIT MARGINS USE LEVERAGE AFTER BEING UP 15% TO FULLY CAPTURE DOUBLE PROFIT POTENTIAL. This is a pick from the master BILLY 4th of JULY 90 percent correct on his buys... MENTOR TO JACKIE MOON AND MYSELF DOES HE EXSIST OR IS HE JUST A CONCEPT THAT THE WORLD CHASES HOPING TO UNDERSTAND HOW THAT ELABORATE FIXTURE WE CALL HIS BRAIN WORKS ALL THIS CREATED IN THE BLINK OF AN EYE ..... BUY BUY BILLY 4th OF JULY ALWAYS BUY ALMOST ALWAYS SELLS PAST HIGHS I attached the links to show how the sell from WXT occurs then the support at 9 ema 8-10 stabilizes the 9 initiates buy backs
PLong
by bhorbs81