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Coveredcall

Update: TLT March 21st 95 Covered CallsA "refresh" of a fairly long-running cash flow setup, with the cash flow emanating from (a) short call premium and (b) dividends. As of the 12/18/24 dividend, my break even is at 85.81 (including dividends). (See Post Below). One of my New Year's resolutions is to be a little more patient and roll out the short call on approaching worthless, targeting the short call strike paying around 1% of the strike price in credit, but my mouse hand occasionally seems to have a mind of its own ... .
NASDAQ:TLTLong
by NaughtyPines
AIPIExploring the AI Covered Call ETF: AIPI Let’s take a look at AIPI, a covered call ETF that focuses on stocks in the AI sector and trades on the US stock exchange. If you're analysing the chart, you might notice that dividend indicators don’t appear. That’s because this ETF doesn’t technically pay dividends. Instead, it collects dividends from its holdings, pays taxes on them, and distributes the rest to investors as taxable income. This is important to understand for tax planning, as it may impact how you report income depending on where you live. The Strategy Behind AIPI Being a covered call ETF, it limits your upside, especially in strong bull markets. However, the fund managers often adapt by writing covered calls at higher target prices when markets are bullish, capitalizing on demand for options. Most option buyers lose, which benefits the ETF's income strategy. If you dive into the distributions and run the numbers, you’ll see that AIPI has been yielding approximately 30% annually. It’s a strong performer, but as with any investment, diversification is key. You might want to start small—maybe one or ten shares—and hold it for a few months to see how it performs for you. Research the Components When you look at AIPI, understanding its holdings is crucial. While the components might not show up directly on TradingView, a quick Google search can reveal the ETF's portfolio. You can also use benchmarks like SMH (a semiconductor ETF) as a rough gauge, but digging into the individual stocks within AIPI will give you a clearer picture of its trajectory. A Trading Strategy Idea Here’s a potential strategy for those interested in short-term moves: Buy before the ex-dividend date. Hold to collect the distribution. Set a limit order at your purchase price or slightly higher to sell after the payout. This approach could net you around 30%/12 per month, depending on timing and execution. Of course, this requires monitoring and is not guaranteed. Other Covered Call ETFs to Explore While AIPI is exciting, there are other options out there depending on your region and goals. For example: On the TSX (Canadian markets): BANK or UMAX, which focus on Canadian stocks or are hedged to the Canadian dollar. On the US markets: QDTE, a weekly payout ETF. Run the math on annual distributions and compound that over time. If you’re young, this can be a powerful strategy for long-term growth. Final Thoughts Covered call ETFs like AIPI aren’t a secret ATM, and you shouldn’t expect them to churn out cash indefinitely. However, they can be a great addition to a diversified portfolio, especially for income-focused investors. I personally own AIPI and think it’s flying under the radar. Many websites don’t display full annual gains until the ETF has traded for at least a year, so it might not yet be on everyone’s radar. Do your research, calculate potential returns, and explore different strategies to see what works for you!
NASDAQ:AIPILong
by AnotherBrian
Opening (IRA): USO December 20th 68 Covered Call... for a 66.48 debit. Comments: Back into the slippery stuff with /CL trading at 70.48. Selling the -75 delta call against stock to emulate the delta metrics of a 25 delta short put, but with the built-in defense of the short call. My basic approach here is to dink and donk on the underlying when /CL is at $70/bbl. or below. Metrics: Break Even/Buying Power Effect: 66.48 Max Profit: 1.52 ROC at Max: 2.29% 50% Max: .76 ROC at 50% Max: 1.15% Will generally look to take profit at 50% max; roll out short call on take profit test. I'll also look to add "rungs" should I be able to do so at strikes/break evens better than what I currently have on.
AMEX:USOLong
by NaughtyPines
Opened (IRA): USO Dec 20th 63 Covered Call... for a 61.26 debit. Comments: (Late Post). High IV (67.7% as of Tuesday close) + weakness. Added a "rung" to my existing position at a strike better than what I currently have on, selling the -75 delta call against shares to emulate the delta metrics of a 25 delta short put, but with the built-in defense of the short call. Metrics: Buying Power Effect/Break Even: 61.26 Max Profit: 1.74 ROC at Max: 2.84% 50% Max: .87 ROC at 50% Max: 1.42% Will generally look to take profit at 50% max, roll out in-profit short call on test of take profit. Here, the 50% max take profit would be .87 + 61.26 or 62.13.
AMEX:USOLong
by NaughtyPines
Opening (IRA): EWZ July 19th 31 Monied Covered Call... for a 30.31 debit. Comments: Decent 30-day IV at 34.0%, but I'm primarily looking to position myself to grab the June dividend. IV is skewed to the put side in this underlying, so the general go-to would be short put, but to grab the dividend, you have to be in stock. Because I want the extrinsic in the short call to exceed any dividend, I'm basically going at-the-money/slightly monied with the short call and will look to manage the position after the dividend drops. Unfortunately, the distribution has been wildly variant, so it's hard to tell how much extrinsic to keep in the short call to diminish the prospect of being called away early due to some dick exercising their long call early to grab the dividend. Metrics (Sans Dividend): Break Even/Buying Power Effect: 30.31 Max Profit: .69 ROC at Max: 2.28% ROC at 50% Max: 1.14%
AMEX:EWZLong
by NaughtyPines
Opening (IRA): BITO July 19th 30 Covered Call... for a 26.12 debit. Comments: Re-upping after closing out my longer-dated covered call (which I had rolled all the way out to December). Selling the -30 delta call against long stock here. As before, will look to roll out the short call for duration at 50% max, collect the monthly dividend along the way ... . I'll also look at selling short put, assuming I can get in on weakness and with a resulting break even better than what I currently have on.
AMEX:BITOLong
by NaughtyPines
Opened (IRA): BITO April 19th 31 Covered Call... for a 27.54 debit. Comments: High IVR/IV at 97.9/81.9% and a monthly dividend to take advantage of. However, the monthly dividend has varied widely -- with the last two distributions paying .36 (February 8th) and .73 (March 8th) with an annual dividend of 8.72 (.73 average monthly) (31.7% annualized as a function of current price). I'm primarily looking to grab the April monthly here; anything additional above my break even will be gravy ... . In any event, the metrics: BPE/Break Even/Cost Basis in Shares: 27.54 Max Profit (ex. dividend): 3.46 ($346) ROC at Max: 12.56%
AMEX:BITOLong
by NaughtyPines
1
Opening (IRA): TLT Jan 17th 2025 100 Covered CallsComments: Doing something long-dated here in 20 year+ paper to get in at a cost basis that is coincident with a 10 year yield at 4.10%. Metrics: Buying Power Effect/Cost Basis: 91.40/contract Max Profit: 8.60 ($860)/contract ROC at Max as a Function of Buying Power Effect: 9.41% (Excluding Dividends) ROC at 50% Max as a Function of Buying Power Effect: 4.70% (Excluding Dividends) Delta/Theta: 49/1.00 Will look to roll out the short calls at intervals if they're in profit to reduce cost basis further. They're currently marking at 7.00/7.25 with the only available expiry to roll out to in Jan of 2026 (so I'll be forced to sit on my hands for "a bit").
TVC:TNXLong
by NaughtyPines