Question for the raging bulls with a hold 'em till the wheels fall off strategy.
Would you or do you ever put your shares at risk with selling covered calls? The recent gouging on buying calls has me thinking about selling short term, low probability calls. The way I understand them, at worst, I am forced to sell my 100 shares at the strike price and keep the fee. At best, I still keep the fee and my shares.
The example I'll use here is 3/20/20, $1,200 strike pays $1,600. Would it really be so bad if I sold 100 shares at $1,200 a month from now knowing what I do today.
A % of my stocks is always up for sale via covered calls. ( 30%) - this is for the MM who are delta hedging
. I have another 20% planned to try to take advantage of short squeeze if prices go over 1200. (Limit order, because I cannot manage my account all day). 50% is what I will not touch no matter what.
At the same time, I am willing to add scaffolding to my positions by buying other calls around the sold covered calls, to negate the delta.
For lower SP buying back would be OK, but now Covered Calls are more expensive to buy back. So I buy other calls instead.
Once the current ones are negated, I then sell even further out Calls once again.
I current have $900 calls which have been push from covered calls I sold in 320 range. What I learnt is this is all manageable if you have other funds in your account. In my personal account with less funds, I had to get rid of shares and calls, since the SP went up so high, and it was basically dead money.
So might not always work, but it can be made to work.
based on Tesla's road map, my current thought is to always make sure i can manage the Covered Calls and not let go of core holdings(even the 30%). Rest is just "safety valve" and gamesmanship. Cheers!!
