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Moniedcoveredcall

Opening (IRA): ARKK May 17th 44 Monied Covered Call... for a 43.00 debit. Comments: High IVR/IV at 52.7/38.7. Going monied here, buying a Johnny one lot and selling the -75 delta call against to emulate the delta metrics of a 25 delta short put to take advantage of elevated IV on the call side and to have built-in position defense via the short call. This is slightly shorter duration than I like to go (39 DTE), but I also don't have a ton on here, so scrounging around for decent IV underlyings. Cathie also doesn't pay divvies but once a year in December, so there's no point in hanging around in the stock for any period of time. Will generally look to take profit at 50% max on the whole shebang (stock + short call) and/or roll out the short call if it hits 50% max to reduce cost basis further. Metrics: Buying Power Effect/Cost Basis In Stock/Break Even: 43.00/share Max Profit: 1.00 ROC at Max as a Function of Buying Power Effect: 2.33% ROC at 50% Max: 1.16% As previously noted in my other monied covered call posts, this only makes sense in a cash secured environment where you don't get BP relief going short put. On margin, short put will be the most BP efficient.
AMEX:ARKKLong
by NaughtyPines
Opened (IRA): TQQQ May 17th 55 Monied Covered CallBought a one lot of shares and sold an in-the-money -75 delta call to emulate a 25 delta short put to take advantage of call IV skew and to have built-in pro via the short call. Metrics: Break Even/Cost Basis in Shares: 52.71 Max Profit: 2.29 ($229) ROC %-age at Max: 4.34% ROC %-age at 50% Max: 2.17% Will generally look to take profit at 50% max, add at intervals at a strike/cost basis better than what I currently have on should weakness present itself.
NASDAQ:TQQQLong
by NaughtyPines
Opening (IRA): KWEB May 17th 24 Monied Covered CallLooking to get a fill on a monied covered call in KWEB (IVR/IV 12/33.2) while I wait around for some (or any) vol to show itself in the broader market. That IVR isn't great, but I'm going small so that I can potentially add at more favorable strikes/share cost bases should an opportunity present itself. It's pre-market, so bid/ask is somewhat wide on both the shares and the short call, but I'm looking to buy a one lot and sell a -75 delta call against for around 26.09 in order to emulate the delta metrics of a 25 delta short put, have built-in short call defense, and to take advantage of IV skew on the call side (it's 39.4% at the 24 call strike; 32.4% at the 24 put). On a side note, the on margin variant of a Plain Jane short put isn't paying spectacularly from a dollar and cents standpoint: the May 17th 24 short put is paying .37 at the mid, which isn't anything to write home about, but that would be on a BPE of 6.72 (5.51% ROC at max; 2.75% at 50% max; 23.63 break even) should you want to go the standard short put/acquire/cover route. Break Even/Cost Basis in Shares/Buying Power Effect: 23.09 Max Profit: .91 ($91) ROC at Max: 3.49% ROC at 50% max: 1.74% In all likelihood, I'll have to "penny up" if I don't get a fill for 23.09 ... .
AMEX:KWEBLong
by NaughtyPines
Opening (IRA): GDX February 16th 29 Monied Covered Call... for a 28.24 debit. Comments: GDX (IVR/IV 40.8/ 32.9) is at the top of my IV screener for ETF's (along with GDXJ, which has higher IV, but is less liquid). Buying stock and selling the -71 delta call against, resulting in a max profit potential of .76 ($76)/contract; 2.69% ROC at max; 1.35% at 50% max. That .76 isn't massively compelling, but the ROC is "decent" for what I'm trying to do in the IRA on a month-month basis.
AMEX:GDXLong
by NaughtyPines
Opened (IRA): SMH May 17th 198 Monied Covered Call... for a 192.24 debit. Comments: Opened this in late Friday's session as it floated to the top of my IV screener with IVR/IV at 106/39. Sold the -75 delta call against 100 delta of long stock, with a resulting cost basis of 192.24/share. This is to emulate a 25 delta short put and to take advantage of call side IV skew while having "built-in" position defense via the short call. Will look to add at intervals, assuming IVR/IV remains high, generally taking profit at 50% max and defending via roll out of the short call. Metrics: BPE/Break Even/Cost Basis in Shares: 192.24 Max Profit: 5.76 ($576) ROC at Max: 3.00% ROC at 50% Max: 1.50% Variants: Short Put: May 19th 200 Short Put, 4.65 at the mid, 195.35 (cash secured), 25.70 (on margin). 2.38% ROC at max, 1.19% at 50% max for cash secured; 18.09% ROC at max, 9.05% at 50% max on margin (which is why you stick with the short put on margin; it's more BP efficient). Synthetic Short Put: May 19th 110/200 Short Put Vertical, 4.50 at the mid, 85.50 (cash secured), paying .15 to bring in BPE by more than half, 5.26 ROC at max, 2.63% at 50% max. This would only make sense in a cash secured environment from a BP efficiency standpoint; the naked short put remains more BP efficient on margin than either the covered call or the "synthetic naked short put" spread. Standard Short Put Vertical: May 19th 190/200 Short Put Vertical, 2.03 at the mid on BPE of 7.97 (both cash secured and on margin), 25.57% ROC at Max; 12.74% ROC at 50% max.
NASDAQ:SMHLong
by NaughtyPines
Opening (IRA): XBI May 17th 88 Monied Covered Call... for an 85.94 debit. Comments: 32.5% 30-Day IV. Buying a one lot and selling a -75 delta call against to emulate a 25 short put, take advantage of call side IV skew, and to have built-in defense via the short call. Metrics: Cost Basis/Break Even/Buying Power Effect: 85.94 Delta/Theta: 28.5/4.31 Max Profit: 2.06 ($206) ROC at Max: 2.40% ROC at 50% Max: 1.20% Will generally look to take profit on the entire setup (stock + short call) as a unit at 50% max; look to roll the short call for duration it hit 50% max at any time to reduce cost basis further; add short put, assuming I can get in at a strike with a lower break even than what I currently have on.
AMEX:XBILong
by NaughtyPines
Opening (IRA): TQQQ April 19th 53 Monied Covered Call... for a 50.93 debit. Comments: Selling the -75 delta strike against a one lot to emulate a 25 delta short put with built-in defense via the short call. The call IV skew that I was looking to take advantage of before has evaporated somewhat, with the same strike short put paying about the same (1.94) as the max profit potential of this setup. Since I'm doing this in a cash secured environment, I don't get much BP relief over doing the monied versus the short put, so am really doing this setup for its "built-in defense" that I don't have to add in later, as I would should I want to defend a short put. Will generally look to take profit on the entire setup at 50% max, look to roll out the short call at 50% max, and add at intervals, assuming I can get in at lower risk strikes. Metrics: Cost Basis/BPE/Break Even: 50.93 Max Profit: 2.07 ROC at Max: 4.06% ROC at 50% Max: 2.03%
NASDAQ:TQQQLong
by NaughtyPines
Opening (IRA): GDX June 21st 24 Monied Covered Call... for a 22.83 debit. Comments: Selling the -75 call against a one lot here out in June where I have covered calls at the 29, 27, and now 24 strikes. 1.17 max on BPE of 22.83; 5.12% ROC at max; 2.56% at 50% max. Going monied CC here in lieu of an equivalently delta'd short put to take advantage of call side IV skew (39.6% on the call side; 29.18% on the put side at the 24 strike). This is probably about as much BP I want to devote to a miners position, which I view as an indirect rate cut play with the notion being that the dollar weakens somewhat, gold strengthens, and miners indirectly follow with bets being that there's a rate cut in May. It may naturally end up being later; the market hasn't exactly been "spot on" with either the timing of depth of cuts of late ... . Alternatively, GDXJ/GDX are at the top of my screener for 30-day IV, so I'm just going where the juice is at.
AMEX:GDXLong
by NaughtyPines
2
BTO* FXI April 17th 20.5 Monied Covered Call... for a 19.90 debit. Comments: Looking to establish a position in FXI over time on weakness via monied covered calls to emulate selling a 25 delta short put, but with built-in downside defense via the short call and to take advantage of call side IV skew. The underlying also has a dividend that pays out in June and December, but with somewhat variable amounts and with the Dec distribution being far larger than the June one (e.g., 2022: June .145929; Dec .593146; 2023: June .154374; June .149 (special); Dec .6074). Consequently, I 'd be more interested in grabbing the Dec than the June, so may modify my strategy slightly to allow for the grabbing of those by selling an OTM covered call in those expiries instead of ITM so that my shares don't get called away before the divvies drop into my account. I have an order in to open for 19.90, but may penny up to get a fill just to get a starter position on. Metrics: Buying Power Effect/Cost Basis in Shares: 19.90 Break Even: 19.90 Max Profit: .60 ($60) ROC %-age: 3.02% at max, 16.2% annualized; 1.51% at 50% max, 8.10% annualized. * -- Buy to Open
AMEX:FXILong
by NaughtyPines
Opening (IRA): TQQQ April 19th 50 Monied Covered Call... for a 47.75 debit. Comments: Dabbling a smidge in the leveraged ETF due to its high IV (56.3% 30-day). Selling the -75 delta call against a one lot to emulate a 25 delta short put, but with "built-in" defense via the short call, which can be rolled down, out, or down and out to reduce cost basis and setup break even. As usual with the sort of thing, will look to add at intervals, assuming I can get into setups that have a cost basis lower than this starter position. Metrics: BPE/Break Even: 47.75/share Max Profit: 2.25 ($2.25) ROC %-age at Max/50% Max: 4.71%/2.36%
NASDAQ:TQQQLong
by NaughtyPines
Opening (IRA): QQQ April 19th 405 Monied Covered Call... for a 397.94 debit. Comments: Re-establishing here in the Q's with a +25 delta monied covered call to take advantage of call side skew. Will look to add at intervals, dispersing risk across expiries, and generally take profit at 50% max and/or roll out the short call on test. Metrics: Max Profit: 7.06 ($706) ROC %-age at Max/50% Max: 1.77% at max; .89 at 50% max Break Even/Cost Basis: 397.94 Delta/Theta: 25.42/11.42
NASDAQ:QQQLong
by NaughtyPines
2
Opening (IRA): SMH March 15th 176 Monied Covered Call... for a 172.42 debit. Comments: While I'm waiting for a July contract to open up in broad market instruments (IWM, QQQ, SPY), shopping around the ETF space for premium. Relative to broad market, SMH IV isn't horrible (the 30-day is currently at 29.3%). Selling the -75 delta call against long stock, to emulate a 25 delta short put and to take advantage of call IV skew (32.9% on the call side; 27.2% on the put). 3.58 max on BPE of 172.42; 2.08% at max; 1.04% at 50% max. Will generally look to take profit at 50% max; roll out the short call to reduce cost basis further if it doesn't get there.
NASDAQ:SMHLong
by NaughtyPines
Opening (IRA): IWM April 19th 176 Monied Covered Call... for a 171.23 debit. Comments: Buying stock and selling the -75 call against to emulate the delta metrics of a 25 delta put. This setup gives me a slight bump in premium over selling the 25 delta put due to call IV skew, along with built-in position defense with the short call. Laddering out over time after flattening out at the end of the year. I'll naturally look to add in shorter duration if I can get in at strikes/cost basis below what I currently have on, but will probably continue laddering out to the end of the second quarter (June) for a bit here. Will generally look to take profit at 50% max; look to roll out the short call to reduce cost basis further should price traverse the short call strike (since extrinsic is highest in at-the-money strikes).
AMEX:IWMLong
by NaughtyPines
Opening (IRA): XBI March 15th 84 Monied Covered Call... for an 81.63 debit. Comments: 32.1% 30-Day IV. My general preference for ETF IV is >35%, but there isn't much currently there in my ETF screener, and I'm already in a GDX position: TQQQ (52.3%); USO (38.1%); GDXJ (35.0%). Buying a one lot and selling the -75 delta call against to emulate a 25 delta short put with "built-in" defense of the position via the short call. 2.37 max on BPE of 81.63; 2.90% ROC at max; 1.45% at 50% max.
AMEX:XBILong
by NaughtyPines
Opening (IRA): IWM March 15th 183 Monied Covered Call... for a 179.87 debit. Comments: Doing another one of these in March with a short call strike and cost basis better than what I currently have on at the 186. Selling the -75 delta call, buying a Johnny one lot to emulate a 25 delta short put in order to take advantage of call side IV skew. 3.13 max profit on BPE of 179.87; 1.74% ROC at max; .87% at 50% max. Will generally look to take profit at 50% max/roll out the short call to reduce cost basis further in the event price breaks the short call.
AMEX:IWMLong
by NaughtyPines
Opening (IRA): IWM Feb 16th 187 Monied Covered Call... for a 183.65 debit. Comments: Doing things a little bit differently here, buying stock and selling the -75 delta call against to emulate the delta of a 25 delta short put, but with the ability to immediately defend the position with the short call, rather than waiting to roll the short put. First, the metrics: Max Profit: 3.35 ($335) Buying Power Effect/Cost Basis/Break Even: 183.65 ROC at Max as a Function of Buying Power Effect: 1.82% ROC at 50% Max: .91% Delta/Theta: 23.1/6.31 Now, the why ... . Previously, I looked to ladder out short puts targeting the shortest duration <16 delta strike paying around 1% of the strike price in credit and utilize a portfolio-wide short delta hedge which used buying power to put on and maintain. Here, I'm looking to manage risk on a per-position basis and to take advantage of some IV skew on the call side (i.e., the IV on the call side is greater than the IV on the put side at the correspondent put strike). Because of this, the premium/max profit is a smidge richer doing things this way relative to just selling a put. This only makes sense in a cash secured environment, where you don't get much BP relief going short put over covered call. On margin, this wouldn't make a lot of sense from a buying power efficient standpoint, so I'd use a different setup where I could manage side risk more effectively (e.g., short strangle, iron condor, Jade Lizard). Naturally, there are more BP efficient, IRA-friendly setups (e.g., Poor Man's Covered Call), but they have some warts of their own. From a trade management standpoint, I'll still look to take profit at 50% max, as I would've with the short puts and look to roll out the short call for a credit if it's tested, reducing cost basis further and improving my break even. Since I have nothing on here, I'm going shorter duration than I ordinarily would, but will start building out in longer duration at intervals as I did previously. On a side note, most people (unscientific survey, gleaned from culling through relevant Reddit posts) who "wheel" or do covered calls do not like this setup because it caps out profit, and I fully understand the preference to sell out-of-the-money calls against your stock and manage the position from there, particularly if the stock pays dividends that are decent. My personal preference, however, is to book realized gains "liberally," have a minimal of crap piles on at any given time, and generate a fairly regular cash flow. As we know from the past year, the market doesn't always go up, and the important thing is to be able to reliably make money in up, sideways, and to a certain extent, down markets with a minimum of headaches which is what these setups (out-of-the-money short puts, monied covered calls) allow me to do. Does it have a hugely sexy ROC that I can show off to chicks at bars? No. Does it pay for the bar tab? Certainly ... .
AMEX:IWMLong
by NaughtyPines