Checking to see if I'm understanding how your'e doing things right now, at least on the call side.
Sell 10% of the possible cc's at an aggressive strike for ~2 weeks out. One week later, sell a new batch of about 10% of your possible cc's, again 2 weeks out.
Now you have 2 sets of 10% cc's expiring every other week. Manage them as typical for cc's, but being much more ready / eager to take assignment (and bring a 3rd batch of 10% of possible cc's in to replace the ones just assigned).
Simplistically the idea is that if 10% or 20% of your possible covering calls can generate all of your target income, then you've got most of your shares/leaps uncovered to take full advantage of the share price taking off. While continuing to fully generate target income from the minority subset that are covered.
Is that about right?
EDIT to add:
Similar idea could / would also work well on the put side.
You got it!
If we were trading higher in the 200's, I'd write -c300, or higher, weeklies and take my chances, on the basis that my shares were mostly bought at $300
But I have 1000 $TSLA from -p240's, which are already profitable if I let them go at -c220 and 1500 I straight FOMO bought for pre-split 878, I've taken around $55 premium on these, so again wouldn't be a drama if 1000 of them got sold at 220, although I prefer to keep hold of those
I think the chances of the SP going to 300 or back to 200 are a coin-flip, so I'm a bit wary of writing -c260's against all my shares as there's a chance they go ITM fast, then it's a big management to recover. If I allow 1000 to exercise at 220 then I've mitigated risk in the current climate by increasing my cash-on-hand, and I can consider writing puts against that extra capital, which will bring in more premium, worst-case is I get 1000 shares assigned back, but at a lower cost-basis -> I have avoided writing puts recently because I didn't want to deplete my cash further
The other 10x -c220, which I don't really want to exercise, I always have the option to roll them up and out 6 months to -c300, or whatever, and still be left with 80% of my shares at a much higher SP, and the ability to write shitcalls at a comfortable strike
Small difference for the moment is that I prefer to hold these shares long, I'm hyper-bullish on Tesla, but know full-well that TSLA doesn't always follow along
Note I also wrote 15x Jan 24 -c300's last week against my 15x Jan 24 +c233's. Rationale here is that those LEAP's are 50% down right now, with no guarantee they'll come good. Worst-case is that the -c300's go ITM, but then the delta between the two positions + the premium I took, recuperates my initial investment. They're also a small downside hedge and I'll re-buy the position if we dump again, resell when it recovers - I can also decide to cover those with shares if necessary and sell the LEAPS if they go big, then start to roll them up and out, that's another possibility
I’m selling straddles exclusively now so that at least I can profit from theta decay, which is the only certainty here. My 11/18 -c/-p 230s are doing awesome. Printed 2 week’s expenses in the past two days. I’ll just roll up/down and out as needed.
