Coverd calls

[met1989]

Well let's break down if this set up makes sense to trade.
"Im confident the market won't hit the strike price" <- ??
"Nice return if it expires OTM" <- ???
"Managing time decay in between" <-????????????

So far I am confused on all 3 points.
1) Why are you confident? Confidence does not make money.
2)Nice return? If 400 is a nice return, you are probably trading a 10k - 40k account. What the heck are you doing risking 10k without having any knowledge of hedging?
3)This statement did not make any sense.

All in all, before you put on that trade, you should change your sources of options education. Start by reading the classics. Natenburg/Sinclair/Baird. Then start diving into stats. As someone on this forum once told me "Knowing stats/programming does not give you an edge. Not knowing them gives you a negative edge". Not trying to be rude, I am trying to save you money . Good luck

Thanks
Your right in the general idea that I’m risking 10 k but the game plan is risking only 1500$ to get the return if it expires out of the money my long term strategy is (and tell me if it makes sense ) is to see how the market plays out if it continues and goes back to its highs so I’m good if it’s not moving and staying put im also good and if the market starts to crash then I have to start adjusting the position. By adding puts to it and yes by cutting down the gain cause the out costs money.
Regarding number 3 I meant that if you just buy a put and sell a put the time in between that the value of the contract is going up and down is very hard Psychologically so I wanted to find a place where the moves of the stock won’t be big and I still make a profit
If all of this is BS pls tell me like I said I don’t want to lose money
Thanks

 

[TheBigShort]

You are asking a lot of questions on this forum which is a great thing! It shows you are interested in learning. Since you want to be here for the long haul, lets take a deeper dive.

Let's say the market rallies and you take off the position for a profit. Now what? Can we do the trade again? And again? When the trade goes against you, how will you adjust the position? Why did you adjust it that way? Do you have some evidence that says, that's how you should adjust the trade? Is someone already doing this strategy better than you?

You don't need to find a new strategy. You just have to do something that works better than the next guy ie. providing liquidity.

If you can not show evidence in why you are putting on a trade, it's probably not a good trade. Hope that helps. Ps. Make sure to read the books i mentioned(when you get stuck on the math, there are a ton of resources online to help you. Push through it, don't be like the other people who give up and fall back on technical analysis).