Hello all,
I had figured out my options process during the volotility leading up to, during and right after the election. Now we are in a different market and my standard stocks are not making near as much option wise.
Stocks I’d been making money on are Archer Aviation, NU, Rivian, RocketLab, Sentinal One, Serve Robotics, Soundhound and Upstart.
But now most of the bleeding edge tech kinda things are just in the dumps and weeklies are nowhere near the return I was getting. I am still setting up options, but I feel there must be a better category of stocks for this environment.
Anyone got a system they have worked out for depressed markets with a whole lot of uncertainty ahead? Do I just keep with the tiny returns because, welp they are returns?
After having a bunch of my options called last year, I moved a lot of the proceeds to JEPQ and am now letting it do it for me. Yield just under 10% - but of course down 7% YTD (but better than some on your list).
When we get back to a normal level of uncertainty, I might move that back to individual stocks but I don’t have the time and expertise this market requires to dedicate to covered calls right now.
This is definitely not a recommendation, and I wouldn’t call it anywhere near perfect…
I like using synthetic covered strangles on what look like value priced stocks. I tend to do the synthetic long as far out as I can get and the short strangles about 3 months out, with an intent to attempt to roll within about 2 weeks before expiration.
Yeah, I’m exposed to 2x the downside - but that’s why I use stocks where I see a reasonable likelihood of value.
And yeah, my upside is capped - but if a stock jumps so far in 3 months that I can’t effectively roll the position, then I really shouldn’t complain about the profit.
From a risk perspective, in addition to the 2x downside exposure, the volatility is insane. I eventually resorted to pairing the options strategy in the same account as my bond ladder to make it manageable.
I also need to be careful when I roll down and out. Often, such a roll is due to temporary volatility that happens to hit near expiration. More than once, I’ve found myself with a new short call from the roll where the premium isn’t worth the cap it places on any eventual potential recovery. That’s still a weakness in my execution, and one which I really need to figure out a better way to handle.
High momentum stocks. If your strategy is to do covered call to make steady income, then you need relatively less volatile stocks or wait for the momentum to come back in flavor.
Well, I have been getting super lucky and pulling about 1% a week for some time (~ 4months) during all this volatility. I know, that sounds crazy, and it couldn’t last.
I would like the standard 1% a month, but my sweet spot seems to be in the weekly options. I learned from the MF paid service, but since I cannot do any of the more complicated choices, and I don’t have any margin, those longer time frames didn’t work out for me so well.
In the last year I have gone with the following criteria - stocks I wouldn’t mind owning/stocks I don’t mind selling, stocks with lots of volatility and at the start of their S curve, and stocks that are growing fast with decent numbers.
Seems like that environment might be on pause for now, and when it comes back it is probably going to be a whole different set of stocks.
I used a free site in the past called Optiondash to screen for high options returns for the week. I would use the tool (set up price range of the stock and the expiration date ITM OTM) then go and read all the information that I could find on the stock ie no corruption, no earnings reports, no press conference this week yada yada whatever your criteria would be and then buy a stock, sell the call. The next week I would make a decision on if i would hold the stock and repeat or sell it. It worked quite successfully until I didn’t have the time to devote to it anymore. It is time consuming. Also, if the call premium seemed to be to good to be true, it usually was. Let me know what you think…doc
edit: this is optiondash screening price range $5-20 one strike out expires this Friday. As you can see it has found LAZR with a good covered call return possible for this Friday if LAZR doesn’t tank in the next few days from the earnings report on the 20th.
I was doing options directly, normally selling sub-week calls even a few same-day calls. I also bought some LEAPS.
Now I am using some YieldMax ETF’s.
The share prices generally move with the underlying security. They pay on different schedules. Some pay every week and the others pay every 4 weeks.
They have mostly longs but also have some shorts. I closed a short, DIPS (on NVDA) today. I held it 3 1/2 weeks and made 11% between a small dip in price plus dividends paid.
