Selling covered calls on GS, need some advice

L

Lalit11

I am holding 300 shares of GS at $184.57. My question is what would be the downside of me selling 3 180 calls for $5.00 against my position. I understand I would miss any upside past the $185, and if the stock continues to go down I am still holding the stock which is fine. Am I correct to assume if the stock surpasses $185 before July, that the person exercise those shares? And what if the stock continues to go down how does the option price affect me if I already sold the the July 180 calls for $5.00. Would I be better off to wait and sell those calls when GS trades towards $159 range or even better off selling the $185 call for $3.70 or even the $190 calls if GS trades in the $160 price range. Thanks in advance for your help.
 
Quote from jficquette:

Best time to sell a call is on a big expansion day up.
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Apart from the current atock price you will also want to look at the IV - high stock price and relative high IV is good. If the stock and IV goes down you can consider to buy to close the calls you have sold.
 
Quote from Lalit11:

I am holding 300 shares of GS at $184.57. My question is what would be the downside of me selling 3 180 calls for $5.00 against my position. I understand I would miss any upside past the $185, and if the stock continues to go down I am still holding the stock which is fine. Am I correct to assume if the stock surpasses $185 before July, that the person exercise those shares? And what if the stock continues to go down how does the option price affect me if I already sold the the July 180 calls for $5.00. Would I be better off to wait and sell those calls when GS trades towards $159 range or even better off selling the $185 call for $3.70 or even the $190 calls if GS trades in the $160 price range. Thanks in advance for your help.
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do you understand that if you sell 180 calls you are only getting 43 cents premium because your calls are already 4.57 in the money? your stock will be exercised at any price 180 and over.if the stock continues to go down you keep stock and premium if stock is under 180 at expiration.
 
Quote from vhehn:

do you understand that if you sell 180 calls you are only getting 43 cents premium because your calls are already 4.57 in the money? your stock will be exercised at any price 180 and over.if the stock continues to go down you keep stock and premium if stock is under 180 at expiration.
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He gets 5$ in premium. What happens later can only be a guess, let’s say that he buys back at 1$ he makes 4$.
 
Quote from Lalit11:

Would I be better off then selling the July $190 calls for $3.10?
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First of all is is not clear to me why do you want to sell the calls? To hedge you position or try/hope to make extra money before closeing the stock position?
 
Quote from Lalit11:

Would I be better off then selling the July $190 calls for $3.10?
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depends on what your goals are. if your goal is to insure downside you can sell strikes below the current price. if your goal is income and keep the stock sell strikes above the current price.
 
I am new to options so please bare with me. I don't want to sell my GS stock at a loss, so I thought since I will be holding the stock either way, I might as well get some money for holding on to my GS stock. If I get the stock called away that is fine, I just don't want a loss and of course would prefer a gain:) I thought it would be something safe for me to do. The other option months for March and April have less of a premium at the $180 strike price and May and June are yet unavailable. I thought it would be something safe for me to do.
 
Quote from Lalit11:

I am new to options so please bare with me. I don't want to sell my GS stock at a loss, so I thought since I will be holding the stock either way, I might as well get some money for holding on to my GS stock. If I get the stock called away that is fine, I just don't want a loss and of course would prefer a gain:) I thought it would be something safe for me to do. The other option months for March and April have less of a premium at the $180 strike price and May and June are yet unavailable. I thought it would be something safe for me to do.
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if you sell a call you are always at risk of losing your stock or paying up to keep it. it is never wise to lock in a loss selling calls. what is your gs basis?
 
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