Trading Covered Calls

One of the stranger aspects of this type of trading is the waiting. After expiration I spend 3-4 days look at different options to either buy new covered call trades or write calls on the stock where options expired without being called.

After that, it is 3 1/2 weeks of waiting to see if what I am trying to do works out.  I check share prices several times a day, but it does not really matter unless something goes really stupid. (I have had a few of those over the last 6 months!)

The down days like today are starting to bother me less as I become more comfortable with the stocks I own and what the price changes do to my strategy.

I think as I get better at picking the stocks I want to have positions in, this will be basically a load a forget process (with some oversight).

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2 Responses to “Trading Covered Calls”

  1. finance ninja Says:

    Picking stocks is the hardest thing to do. I think I’m right or should I say you don’t need to be right it just definitely has to move in the direction you think the market will go. Earnings lately have made me go wack, but I’ve been taught not to trade through earnings because I have been burnt even if the stock doubles profits. Look at NYX. What is up with it. It is not reacting like other simular stocks. They say new rules will effect the stock, but it still lists thousands of stocks and creates big income.

    As for penny stocks. I can admit I’ve picked them when they were a trade and then stupidity kicked in when I thought there was a second trade in them when there definitely wasn’t! well later dude. thanks for the comment.

  2. The Trader Says:

    Tim, I’m with you on the pain of waiting for expiration. You will continue to get more used to the wait like you’ve said as you get better at stock picking. You will never get them all right, so the ones you do have to make up for it.
    I try to sell naked puts rather than covered calls, but do both. Selling naked puts OTM or covered calls ITM is about the same and can give you a little more cushion if the underlying stock goes against your plans. It can take some of the worry away and decrease the number of bad picks.


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