Knightshade
Well-Known Member
Depends on a slew of factors, and ones personal risk profile.
Gary Black IIRC sells 15% OTM calls, and only does weeklies... and doesn't sell certain weeks around volatile events....some folks here like 20% others are more aggressive....some trade MORE around volatile events.
If you're selling covered calls (no spreads) then your safety net (ie how you avoid assignment if the stock shoots up and you don't want to be assigned) is rolling up and out, with the thinking the stock can't KEEP shooting up week after week without a pullback... (and apart from much of 2020 that's largely true)
This does take more work than just selling a LEAP at a price you're ok selling at... not a MASSIVE investment in time, but more, and at least SOME work weekly. It also depends on your goals- are you fine just getting some extra $ if it doesn't hit your target in 2 years and selling at that price if it does? Maybe that extra work isn't worth it. Do you want to try maximizing weekly/ongoing gains rather than just get paid to set an exit point from the stock? Maybe that extra work IS worth it.
Other thing to consider, in the US at least all your $ from weekly CC premiums will be short term cap gains and taxed as such... Same is true for selling a LEAP, the premium is STILL short term for the seller even if it's more than a year old when closed- but you wouldn't incur the tax obligation until closed, whereas weeklies mean taxable events weekly.
Gary Black IIRC sells 15% OTM calls, and only does weeklies... and doesn't sell certain weeks around volatile events....some folks here like 20% others are more aggressive....some trade MORE around volatile events.
If you're selling covered calls (no spreads) then your safety net (ie how you avoid assignment if the stock shoots up and you don't want to be assigned) is rolling up and out, with the thinking the stock can't KEEP shooting up week after week without a pullback... (and apart from much of 2020 that's largely true)
This does take more work than just selling a LEAP at a price you're ok selling at... not a MASSIVE investment in time, but more, and at least SOME work weekly. It also depends on your goals- are you fine just getting some extra $ if it doesn't hit your target in 2 years and selling at that price if it does? Maybe that extra work isn't worth it. Do you want to try maximizing weekly/ongoing gains rather than just get paid to set an exit point from the stock? Maybe that extra work IS worth it.
Other thing to consider, in the US at least all your $ from weekly CC premiums will be short term cap gains and taxed as such... Same is true for selling a LEAP, the premium is STILL short term for the seller even if it's more than a year old when closed- but you wouldn't incur the tax obligation until closed, whereas weeklies mean taxable events weekly.