Sorry, I’m not following the 10% yield using covered calls. Care to explain? I’m really slow about these things….
When you first mentioned $1/premium a share….I was wondering why are you doing this for a $1/share…But then you put it into a bigger context for me $12/year for a $175/share… I never thought about it this way. Just curious, I think I know, but what are the worst case scenarios wrto downside risk, beyond what you already sort of highlighted with the example with T? ..I appreciate you sharing…I was just reminded there are a lot of smarter people out their in this world than me, lol….[/quote]
I missed an important step. On the DIA trade, which is where the “$12/yr for a $175/share” came in, I didn’t mention that I’m rolling it every month. The sweet spot is getting in at about 45 days from expiration, and I try to roll at about 15 days. Rolling spreads can be difficult sometimes, particularly when trying to adjust the strikes. Often, I end up buying the current month back and selling the next month. I had orders in to roll spreads in 3 different accounts all day Thurs & Friday and couldn’t get a fill. It was slightly early because I was trying to take advantage of the higher following month volatility. I’ll probably buy them all back on Monday and sell Aug spreads at whatever strikes make sense.
