Best stocks for covered call?

MrMuppet said:
Covered calls capture the risk premium of options. You need to select stocks where the implied volatility is higher than the statistical volatility. Otherwise you just trade leveraged beta
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So where is the best website or other place that gives you (or how do you calculate) implied volatility and statistical volatility?
 
Your broker should have that..
Typically they have some measure of IV 30 (continuous 30 day implied) and customizable period HV..

Market Chameleon has all sorts of vol measures as does Orats which is my favorite..

SoyUnPerdedor said:
So where is the best website or other place that gives you (or how do you calculate) implied volatility and statistical volatility?
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You short the calls for the stocks you wish to own for the next 3-5 years, capturing premium is just icing on a cake. AAPL, TSLA, BA, etc. I personally don’t own the stocks but trade lot of ATM LEAP calendar call spreads.
 
Do you guys look at the volume of the short call when deciding on what short call to select for a covered call?

For instance, I'm bullish (for technical and fundamental reasons) on DOV. The Sept 17 expiring 175 strike call has an OI of 74 but only has a volume of 1.

Would you avoid this option based on the low volume?
 
I dont look at volume,but I do look at the bid offer spread..
I looked at you 9/17 175 and the market was 2.30 at 3.10..

Thats 30-40 percent wide..The stock is 10 cents wide...

Thats a shitload of edge to give up...

I would quote the Buy write or sell the put,but no worse than mid




trendisyourfriend said:
Do you guys look at the volume of the short call when deciding on what short call to select for a covered call?

For instance, I'm bullish (for technical and fundamental reasons) on DOV. The Sept 17 expiring 175 strike call has an OI of 74 but only has a volume of 1.

Would you avoid this option based on the low volume?
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taowave said:
I dont look at volume,but I do look at the bid offer spread..
I looked at you 9/17 175 and the market was 2.30 at 3.10..

Thats 30-40 percent wide..The stock is 10 cents wide...

Thats a shitload of edge to give up...
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Thanks for the reply taowave. I've been looking at poor man's covered calls (PMCC) lately as a cheaper alternative to regular covered calls.

Do you still look for tight spreads for the long, deep ITM call that has an expiration date far away? I find that the long call in a PMCC usually has wider bid offer spreads. Probably because fewer people are trading them compared to a call that is closer to expiration.

For instance, I'm looking at DOV's Dec 17 expiring 155 call. The bid is 19.80 and the offer is 20.40. Is that too wide for an expiration that far away?

Thanks
 
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19.8 at 20.40 is,fairly tight relative to 2.30 at 3.1..

With 10 percent plus protection on the longer dated call,you will hopefully not have to adjust as much and cross bud offer

Do you execute the trade as a buywrite (at a net price)

What's a poor man's covered call??
 
  • An OTM Credit Spread would be far superior to a CC.
  • CC's are sort of useless.
  • Don't get too carried away with the bid/ask spread - your main focus should be the underlying.
 
What exactly are you saying??

Which OTM Credit spread are you referring to??

Are you saying an OTM put spread,or are you saying short an OTM call spread and long stock??

Give me the details,I'll backtest




OptionsOptionsOptions said:
  • An OTM Credit Spread would be far superior to a CC.
  • CC's are sort of useless.
  • Don't get too carried away with the bid/ask spread - your main focus should be the underlying.
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