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Anyone know a good covered call service
- Thread starter 64c2
- Start date
Nikko, my statement you quoted was made in the context that I only write covered calls on stocks trading in the $10 range, and only At The Money Calls. The party on the other side of the Call, would have unlimited upside potential. On the other hand, a person purchasing a Put would have limited profit potential.
I'm sorry if I didn't make it clear that I was talking about low priced stocks. (I actually have a nice one going now on a stock trading close to $7.5, and I was able to get a dollar for an April $7.50C. I was able to find it because I'm a Volatility Trader, not a Directional Trader, and am continuously searching for high IV spikes.
But, rather than argue, let me pose an academic question related to this subject. Is there any validity to my thinking that in deciding between a covered Call write and the synthetic uncovered Put write, that I really need to consider which of these ATM options gives me the greatest amount of extrinsic value?
4Q
I'm sorry if I didn't make it clear that I was talking about low priced stocks. (I actually have a nice one going now on a stock trading close to $7.5, and I was able to get a dollar for an April $7.50C. I was able to find it because I'm a Volatility Trader, not a Directional Trader, and am continuously searching for high IV spikes.
But, rather than argue, let me pose an academic question related to this subject. Is there any validity to my thinking that in deciding between a covered Call write and the synthetic uncovered Put write, that I really need to consider which of these ATM options gives me the greatest amount of extrinsic value?
4Q
Quote from exQQQQseme:
Is there any validity to my thinking that in deciding between a covered Call write and the synthetic uncovered Put write, that I really need to consider which of these ATM options gives me the greatest amount of extrinsic value?
4Q
Are you speaking of a same strike call and put? If so then the answer is no.
Hi Michael.
Yes, for purposes of my academic question, I am comparing same strike Call and Put. I would be interested in your reason for a NO answer.
4Q
Yes, for purposes of my academic question, I am comparing same strike Call and Put. I would be interested in your reason for a NO answer.
4Q
Quote from exQQQQseme:
Hi Michael.
Yes, for purposes of my academic question, I am comparing same strike Call and Put. I would be interested in your reason for a NO answer.
4Q
Put/call parity. Same strike puts and calls are equal in price minus carrying costs. If they weren't you could use conversions and reversals to lock in free money.
Do you know what put/call parity is?Quote from exQQQQseme:
Since you brought up the synthetic equivalence, let's get into the question of which is better. My preference is the covered call write under the conditions I mentioned. Since I'm looking for IV spikes, logic tells me that one would be willing to pay a higher premium when purchasing a Call than purchasing a Put because with such a Put the profit potential is limited.
Quote from exQQQQseme:
Hi Michael.
Yes, for purposes of my academic question, I am comparing same strike Call and Put. I would be interested in your reason for a NO answer.
4Q
I suggest that you play with this with a simulator program until it makes sense to you. When you really understand this at a gut level, I expect your trading will improve.
Michael, the answer is Yes...I consider carrying cost in that when I calculate my return on investment on my covered calls I "annualize" the profit percentage.
Donahuedc, I do have a simulator program. With my covered call writes on low priced stocks, I'm happy with the 8 to 12% monthly I've been generating. I don't know that much about Put Call parity. Every so often, for wha tever reason, I see maybe a 20 or 30 cent difference in the extrinsic values of ATM Puts and Calls of the same strike price. Perhaps I'm wrong, but I attribute it to Implied Volatility, which according to what I have read over the years, is attributable to demand. I have a full time accounting practice I am comfortable with this strategy because I don't need to concern myself with assignment. If anyone wants my stock for the contracted strike price, I'm happy to deliver.
I'm all about Implied Volatility and Fundamental Analysis of the underlying stock. My fundamental analysis always starts with the Balance Sheet, particularly the current assets to current liabilities. If I don't like what I see there, I have no interest in going any further and I look to another issuer for a possible trade.
Thanks to everyone for taking the time to respond.
Donahuedc, I do have a simulator program. With my covered call writes on low priced stocks, I'm happy with the 8 to 12% monthly I've been generating. I don't know that much about Put Call parity. Every so often, for wha tever reason, I see maybe a 20 or 30 cent difference in the extrinsic values of ATM Puts and Calls of the same strike price. Perhaps I'm wrong, but I attribute it to Implied Volatility, which according to what I have read over the years, is attributable to demand. I have a full time accounting practice I am comfortable with this strategy because I don't need to concern myself with assignment. If anyone wants my stock for the contracted strike price, I'm happy to deliver.
I'm all about Implied Volatility and Fundamental Analysis of the underlying stock. My fundamental analysis always starts with the Balance Sheet, particularly the current assets to current liabilities. If I don't like what I see there, I have no interest in going any further and I look to another issuer for a possible trade.
Thanks to everyone for taking the time to respond.