Selling call options in a tough Feb
Just a short update this week. This week was a tough week. Last week I wrote that as the market started to turn and started going down, I decided to buy a few long term call options. These were the call options I bought, most with an expiry date in Jan 2025.
$Procter & Gamble(PG)$
$Netflix(NFLX)$
$Pepsi(PEP)$
$Apple(AAPL)$
$Amazon.com(AMZN)$
$Alphabet(GOOG)$
$Microsoft(MSFT)$
This week, the market continued to go down. While on a whole I am quite confident in the quality of these companies and believe that they will do well in the next 1-2 years, it is still quite painful to see all these call options turning red. At this rate, Feb will not be a good month at all. I also think that the market will continue to struggle in the near term, so I decided to sell a corresponding number of short term call options against the number of call options I have, in order to collect some premium in the meantime. So far these are the call options I sold.
So while I wait for the market and my call options to recover, I will happily collect the premiums which total over $1200 this time. In general I sold options that expire in 2-3 weeks, at around 2 strikes above the strike price of the call option I bought. With this, I believe that even if the prices were to suddenly shoot up, I can close both call options and still make a small profit. If prices continue to decline, I will repeat this strategy when this set of call options expire.
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Modify on 2023-02-26 16:58
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you are doing sort of diagonal call spread or poor man covered call. got to make sure long call delta is large enough. it may not be the best strategy for your long term bullish outlook.
ok