Roll up and out to $40 expiring on 9/19 which would yield $210 in cash and $300 in capital gains which in 101 days would be just over $5 per day. Some fools scoffed at $$$ per Day saying to annualize it
5 * 365 = 1825 for a stock trading at $43.
1,825 / 4300 = 42.4%, not too shabby
See that overlaid link list? I got tired of having links all over the place so I created a MultiLink php class
Clicking the link brings up the MultiLink table. It sure saves time! It works with URLs where you only have to change the stock’s symbol. It’s user editable.
5/13/25 - Buy 100 shares of SMCI for $37
?/?/25 - Sell 37 strike call for $??
6/10/25 - Buy 6/27/25 37 strike call for $6
6/10/25 - Sell 9/19/25 40 strike call for $8.10 ($210 credit on the two calls)
Come 9/19, if exercised, you receive $40 for the shares, capital gain of $300 on the shares. And you also gain $210 + $?? on the 3 option trades.
Now what about the same trade, but no options? Buy 100 shares on 5/13/25 for $3700, sell 100 shares on 6/10/25 for $4300, gain of $600. That’s 28 days, or $21 a day. That’s pretty good! Seems like most of the gain in this trade really came from the stock going up.
Obviously you plan on selling options against this stock repeatedly, but if you’re already selling Septembers now in June, then how many repeats, or how many rolls, can you really do while the stock is still going up?
I don’t think anyone “scoffed” at it! I think they were just pointing out that to compare the value of trades, only an IRR is a meaningful measurement.
This has got to be VERY handy. I spend a bunch of time clicking through and entering symbols all the time. Like just now when I figured out when SMCI could have been purchased at $37.
$$$ per Day is better, more realistic. Grocers charge in dollars, not in percentages. Say your annual budget is $75K, that’s $205.50 per day. Now you can set your target at $205.50 per day. CAGR might be more scholarly but its $$$ that pay the bills.
The Covered Call Selector not only calculates CAGR, it screens by CAGR. But it is not reliable, there is no knowing what price the stock will have at expiration. As was mentioned up thread, options show very hight CAGRs but that assumes the stock will meet or surpass the strike price but that is not what always happen in markets.
Of course this is also true for $$$ per Day. So, if your budget is $75K aim for $400 SSS per day.
I’m looking for income, not capital gains. Buying fine art might be even better, or gold. I thought owning your home was the best investment until Chavez took over. At the end of the day, i’ll take liquidity. Even that is not safe from inflation and hyperinflation.
You can make money selling covered calls on flatlining stocks. The difficulty with covered calls is the volatility. I’ve looked at low volatility stocks for covered calls (V, MA, ROST) and the premiums are very low. So I trade growth stocks but that comes with volatility and the fix is rolling the options.
BTW, I’m not rolling SMCI just now but much closer to expiration (June 27) – if warranted. I’m showing SMCI as an example because I used it to debug my code.
But the trade without the options was $21/day and the trade with the options was $5/day! Why not simply keep doing $21/day trades instead of $5/day trades?
Obviously the answer is that it’s very difficult to only buy stocks that go up, but even the $5/day relies mostly on the stock going up, more than half of that $5/day came from capital gains of $300 because the stock went up from $37 to $40.
Have you ever studied day trading? I did research it and it’s complicated, totally absorbing, and way past my attention span. On the other hand, rolling options you can research to find the best trade at leisure. It has a feature that day trading does not have, the buy and sell prices move in lockstep removing the urgency of day trading. In other words, because it’s not that simple! Because theory and practice, in practice, are not the same.
There are innumerable ways to play the market, we have to find the one that works best of each one of us. Before discovering rolling options I split my portfolio, about 50-50, into LTBH for capital gains and selling covered calls for income.The logic was not to lose the LTBH stocks. That left half the portfolio not creating income.
You would be amazed by how much cash TSLA stock throws off with covered calls but the stock was off limits. When TSLA shot up like crazy late last year I figured it was at or close to a top, safe enough to sell calls, at a strike price well above the current price. TSLA obliged!
On December 18, I sold 30 day calls strike price $510. TSLA kept crashing. Bought the calls back early and sold 35 days calls strike price $450. I kept on trading and figured I needed a tool to improve the trades. The Covered Call Roll Selector [CCRS] was born.
CCRS taught me a lot of lessons, for example, you lose a lot of premium by selling way OTM calls. Instead of looking for safety with OTM calls, rely on rolling the calls. Unless I’m missing a lurking Black Swan my income generation should improve considerably.
I am now considering rolling my Disney calls by a month, and have been modeling it. There is definitely slightly more income if I roll them. Looks like I get an extra $100 per contract by rolling, that’s an extra 50 cents per share for the roll plus an extra 50 cents for the dividend that goes ex on June 24’th. The options pricing takes the dividend into account, so there’s no special gain in the roll, if not for the dividend, presumably the option would be 50 cents higher. So net-net, the roll gives me an extra dollar per share, or 100 per contract.
Now that said, I figured I’d look at the “dollars per day”, so per contract, if I allow the Jun option to be exercised, the stock will be called from me, and per contract I will get $19.11 per day over 99 days. But if I roll it, then per contract I will get $15.68 per day over 127 days. Would you do that trade? Even though it reduces $ per day?
Here’s my spreadsheet with the numbers adjusted to per contract.
Beware, dividend stocks get called! You don’t get the dividend but you make up for it by taking the profit in less time. With the dividend date so close to expiration I’m not sure who gets the dividend. Check the ex-dividend date.
As mentioned above, the ex-dividend date is 6/24. If “they” swipe my shares for the dividend, then the profit goes down by $50, but it goes up from $15.68/day to $19.04/day. By the way, it is VERY likely that they will capture the dividend because that option (the July 105) is trading near 50 cents over intrinsic, so it’s worth capturing the dividend (right now, and presumably on Jun 23rd as well). I could instead roll to the August option, and with that one it won’t be worth capturing the dividend (because it has more time value than dividend value), but the problem with the August is that is spans an earnings announcement.
There’s always another trade that can be done. It also depends on how you define “better”, if you define “better” by using CAGR then it might be different than if you define it by $/day. As discussed earlier regarding comparing trades to each other.
I rolled the Disney options. I chose to roll out to August instead of to July because the July ones are trading too low and would almost surely have the dividend captured from me next week. The August ones are trading substantially high enough that it isn’t worth exercising to capture the dividend. However, the August ones have the disadvantage of being after earnings, but hopefully that doesn’t matter because the call (strike price 105) is so far in the money. We shall see what happens.
I considered rolling to Aug 1, but the volume and OI are anemic for that one, so execution wouldn’t have been certain, and I would have gotten a worse net price. Talking about price, I think I chose my credit too liberally because the trade was executed immediately even though I chose relatively high between net bid and net ask. I thought I would have to wait and perhaps drop by a nickel periodically until it executed.
There is a saying in the stock market that shooting for the last penny in a trade can be your most expensive penny ever because you might miss the trade altogether. These days, specially when rolling options, I place the limit trade near the bid-ask midpoint looking for quick execution. I did a lot of trades today.
Closed the UPST position
Moved the money to an SMCI position
Rolled up and out another SMCI position
This week I finally got the Covered Call Roll Selector fully functional and I’m discovering some improvements it could use. The results are pretty good so far.
