My strategy and book recommendations

[shMark]

I am an advanced beginner to intermediate in options. Here is my strategy. I buy wide moat stocks selling at a discount. My goal is to maybe earn an extra 3% a year by selling weekly covered calls on them. I don’t sell the calls during the ex dividend week, or earnings announcement week. I pick options with a delta of 10 (90% chance of expiring OTM), and if it comes close to the strike price I buy back the option and roll out and up for the next week. If the stocks drops in price I will buy the option back that week and sell a second one. Any thoughts on the strategy, and any recommended books on options for a beginner like myself. I found Lawrnece MacMillan’s book to hard.

And of course, thanks in advance.

 

[schizo]

Check out the following book. It's a good primer on options.

Google Books preview:
https://www.google.com/books/edition/The_Second_Leg_Down/C_EjDgAAQBAJ?hl=en&gbpv=1

 

[semperfrosty]

Check out the following book. It's a good primer on options.

View attachment 331340​

Google Books preview:
https://www.google.com/books/edition/The_Second_Leg_Down/C_EjDgAAQBAJ?hl=en&gbpv=1

Do you options trade schiz?

Does it have any significant advantages over 'normal' trading?

My very basic understanding of it is a trade with a built in hedge.

 

[TrAndy2022]

I am an advanced beginner to intermediate in options. Here is my strategy. I buy wide moat stocks selling at a discount. My goal is to maybe earn an extra 3% a year by selling weekly covered calls on them. I don’t sell the calls during the ex dividend week, or earnings announcement week. I pick options with a delta of 10 (90% chance of expiring OTM), and if it comes close to the strike price I buy back the option and roll out and up for the next week. If the stocks drops in price I will buy the option back that week and sell a second one. Any thoughts on the strategy, and any recommended books on options for a beginner like myself. I found Lawrnece MacMillan’s book to hard.

And of course, thanks in advance.

You need to backtest this over a longer time period. Idk which is best software to do this, but you could look at Quantpedia(.com) ressources. Second there is no free arb here, you need to have an opinion to trade options so there is a strategy behind you need to be aware of, especially the risks involved here.

 

[traider]

I am an advanced beginner to intermediate in options. Here is my strategy. I buy wide moat stocks selling at a discount. My goal is to maybe earn an extra 3% a year by selling weekly covered calls on them. I don’t sell the calls during the ex dividend week, or earnings announcement week. I pick options with a delta of 10 (90% chance of expiring OTM), and if it comes close to the strike price I buy back the option and roll out and up for the next week. If the stocks drops in price I will buy the option back that week and sell a second one. Any thoughts on the strategy, and any recommended books on options for a beginner like myself. I found Lawrnece MacMillan’s book to hard.

And of course, thanks in advance.

won't work, just backtest it in quantconnect or do it live with small amount. You will see quickly why it won't work

 

[newwurldmn]

won't work, just backtest it in quantconnect or do it live with small amount. You will see quickly why it won't work

While, he should do the work anyway, you could also explain why it won’t work since you are so sure.

 

[shMark]

It's not a mechanical strategy, so I don't think backtesting would apply. There is judgement involved. Which stock to pick, which exit strategy to use, what technical indicators to use, etc. But as you said, I willtry it with paper money on thinkorswim and see for myself.

 

[shMark]

And of course, thank you for your feedback all of you.

 

[surfer25]

I am an advanced beginner to intermediate in options. Here is my strategy. I buy wide moat stocks selling at a discount. My goal is to maybe earn an extra 3% a year by selling weekly covered calls on them. I don’t sell the calls during the ex dividend week, or earnings announcement week. I pick options with a delta of 10 (90% chance of expiring OTM), and if it comes close to the strike price I buy back the option and roll out and up for the next week. If the stocks drops in price I will buy the option back that week and sell a second one. Any thoughts on the strategy, and any recommended books on options for a beginner like myself. I found Lawrnece MacMillan’s book to hard.

And of course, thanks in advance.

Think about the consequences for your upside and downside.