In today’s espisode of hungry for returns we are going to take a look at NVIDIA and how to sell short term option calls, and buy long term leaps ahead of that, for protection.
Posted at: https://tradersfly.com/2018/11/selling-front-month-options-hfr-13/
★ Submit your question for a future episode here:
★ REGISTER FOR A FREE LIVE CLASS ★
http://bit.ly/marketevents
★ GETTING STARTED RESOURCE FOR TRADERS ★
http://bit.ly/startstocksnow
* Please note: some of the items listed below could and may be affiliate links **
* Trading Software / Tools *
Scottrade: http://bit.ly/getscott
SureTrader http://bit.ly/getsuretrader
TC2000: http://bit.ly/gettc2000
TradeKing: http://bit.ly/gettradeking
TradeStation: http://bit.ly/getstation
★ SHARE THIS VIDEO ★
★ SUBSCRIBE TO MY YOUTUBE: ★
http://bit.ly/addtradersfly
★ ABOUT TRADERSFLY ★
TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing.
Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better.
Stock trading and investing is a long journey – it doesn’t happen overnight. If you are interested to share some insight or contribute to the community we’d love to have you subscribe and join us!
FREE 15 DAY TRIAL TO THE CRITICAL CHARTS
– http://bit.ly/charts15
GET THE NEWSLETTER
– http://bit.ly/stocknewsletter
STOCK TRADING COURSES:
– http://tradersfly.com/courses/
STOCK TRADING BOOKS:
– http://tradersfly.com/books/
WEBSITES:
– http://rise2learn.com
– http://criticalcharts.com
– http://tradersfly.com
– http://backstageincome.com
– http://sashaevdakov.com
SOCIAL MEDIA:
– http://twitter.com/criticalcharts/
– http://facebook.com/criticalcharts/
MY YOUTUBE CHANNELS:
– TradersFly: http://bit.ly/tradersfly
– BackstageIncome: http://bit.ly/backstageincome
source
Overall, you're buying long call instead of buying shares and then selling premium to capture profits to make up the purchase. Hopefully the call moves up to profit from or you've sold enough premium to cover the loss of the purchase.
My philosophy when thinking about this is a bit different. For example I believe that cgc at $42.70 is going much higher. And I want to give myself enough time to realize a nice profit. So I would buy 10 Jan 15, 2021 $42.00 calls for $19.00. Once I've done that it gives me the opportunity to pay for those calls buy selling weekly call out of the money for like 110 weeks. And maybe make a bit more than than that. So if I divide $19,000 by 110 I need to make about $200 a week in premiums to pay for the $19,000 in premium that I paid and have a bit of actual profit leftover. Also for safety one would not want to write 10 weekly contracts because they move much faster than a two year leap. So I'm thinking 2 contracts is plenty. Starting the weeklies between 2 to three weeks out I would sell the 23 Nov $49 strike price for probably at least $1.10. Then every week I can sell another 2 contracts.
The main problem would be if the price of cgc went up too fast. Then the 200 shares might get called out and i'd either have to buy the shares at a potential loss but probably have a nice profit on the leaps plus the premium collected on the sold calls. Or I could exercise two of my leaps and bag a nice profit. Anyway, this is what I was formulating when I ran across this video.
You’re brainwashed shmuck