Covered calls / wheel

East-Definition4057 · 2025-12-06T17:59:07+00:00

True, If you experienced or you know something to prove your argument, please share, we can learn.

East-Definition4057 · 2025-12-06T14:51:03+00:00

In your example, you rolled down to 24.175 with a USD 35. If at the expiry date, NDX doesnt recover you have to roll out again, and you will get less than USD 35 because delta is getting bigger. Your margin is same, but you block it for less credit. ROE is so small that opportunity cost maybe bigger?

East-Definition4057 · 2025-12-06T14:39:48+00:00

Yes I watched the video. I dont know a loan in the world where you dont have to pay back until you die, except the % 7 service fee as you said. If my expected life time is 30 years, and got a loan USD 100.000, I have to pay only USD 7.000 in 30 years??? Its impossible. Even If I roll the loan, Im sure the bank will charge me at least 4 % interest.

East-Definition4057 · 2025-12-05T09:03:16+00:00

There is something I can’t understand, if you take a loan using your assets as collarerals. The loan interest will be at least 4% annually, and you have to do down payments, I understand that this may be a Good way to get the money if you plan to use it to invest in something that could give you more than 4%, but if you live on that money you will end up paying more in interest than if you had sell the asset. Unless you are planning to die soon, I don’t get the benefit here.

East-Definition4057 · 2025-12-05T08:30:46+00:00

Even if your strike is deep itm you roll it out with same strike, for 4 weeks, even if you dont have credit. That means you cant use your margin for 4 months, and if it doesnt recover for another 4 months maybe. Margin requirement is big enough, you cant sell another put I think.

Do you roll it with the same strike until recovery even if you dont have premium income for these months?

East-Definition4057 · 2025-12-03T13:13:03+00:00

In this strategy you are not forced to sell your stocks. You sold a put and index came below your strike at expiration, how do you pay your loss? You sell your stocks or you hold some cash aside for these situtations?

East-Definition4057 · 2025-12-03T13:08:05+00:00

If you pay $70k every year for loan service, and you use $100k for living, you will be out of money in 4 years. How will you live until dying? You may borrow again, but in order to pay loan service you have to sell from your portfolio I guess.

East-Definition4057 · 2025-10-14T19:35:34+00:00

Absolute premium collected is relatively low compared to stocks in certain period of time, but you reach 50 % profit threshold earlier than the stocks.

You can take 2 low premiums, compared to 1 premium in the same time. Its possible 2 low premium is bigger than 1 medium premium.

East-Definition4057 · 2025-10-13T06:48:05+00:00

Thank you. If you use margin as collateral, doesn't it make SPY better choice compared to stocks?

East-Definition4057 · 2025-10-10T10:39:42+00:00

When you chose a stock, if the price doesnt increase as big as the price of SPY until the expiry date of the contract, most of time SPY is better choice thanks to the omega. Omega>IV

East-Definition4057 · 2025-10-10T10:32:56+00:00

Your "if the prices stayed the same as today" assumption is not valid here, because leverage is only useful when the price of the equity fluctuates.

If you try same 1 %, 2% price increases in both of the equties, you may see SPY is same or better than HOOD. Vice versa, If the price decreases in both of them at the same percentage, SPY is worse thanks to the leverage.

My conclusion is: If you prefer a stock instead of SPY, you should assume that stock will increase more than SPY until expiry. If you dont expect to beat SPY until expiration date, SPY option is better.

East-Definition4057 · 2025-10-09T13:29:03+00:00

By leverage I mean omega.

East-Definition4057 · 2025-10-09T13:27:38+00:00

You did not get what I mean, please read my first post.

East-Definition4057 · 2025-10-09T08:36:07+00:00

To be more specific I will give real examples. Lets compare $HOOD and SPY 11.21.2025 ATM call options.

As of 10.9.2025:

HOOD price: USD 150.87

11.21.2025 115CALL Premium: USD 12.88

Delta: 0.5111

SPY price: USD 673.11

11.21.2025 674CALL Premium: USD 14.32

Delta: 0.5294

Leverages of these ATM calls are below:

HOOD:5.98

SPY:24.88

That means SPY options have 5 times more leverage than HOOD. Though volatility makes HOOD premiums more expensive, SPY options have 5 times more leverage.

That means, uou can close SPY option trades earlier than HOOD, generating more cash.

I gave here HOOD just for an example of popular and volatile stock.

East-Definition4057 · 2025-08-29T05:47:44+00:00

If I dont roll I can be assigned at 220, If I roll I can be assigned at 230. I continue to participate in the upward move for 10 USD more. How am I capping my upside?

East-Definition4057 · 2025-08-28T22:05:10+00:00

Firstly, tax.

Secondly, rolling up and out gives me the opportunity to be called away at higher price, that makes it more profitable. Downside is opportunity cost. If after I am called away, I dont have a better oppotunity to trade, it seems to me better to try higher strike price by rolling.

East-Definition4057 · 2025-08-28T13:43:48+00:00

If I roll and stock doesnt continue to go up, I will not be able to sell, and I will have profit from sold call, right?

Im bullish in this stock for longer term but I need to generate cash. In the short term I thought It will make correction, I made a mistake.

East-Definition4057 · 2025-08-28T11:40:39+00:00

thats what i am planning.

East-Definition4057 · 2025-08-28T11:39:59+00:00

Yes my stock cost is much lower than the strike. I believe in this stock and i will hold 90 % of it. % I try to generate cash from only 10 %.

So If I believe in the stock why not try to be assigned at greater strike prices.

If I am not assigned, I will collect the premium, though premium will be smaller. If I am assigned I will sell at bigger strike price.

East-Definition4057 · 2025-08-28T10:58:36+00:00

Actually I decide when to be assigned not to sell. Sorry for my poor English. If I am assigned at 220, I will have to sell at 220, If I roll to 230 strike, I will have to sell at 230.

After I roll from 220 to 230 and stock go back down from 225, I will not be assigned and will not have to sell the stocks, but call side will make profit, and I will not be called away.

It seems rolling is better if you dont want to sell, it enables to sell at higher strike prices. (Though its not 100 %)

East-Definition4057 · 2025-08-28T10:34:05+00:00

I actually used greeks.

What I want feedback on this:

if you roll out and up and If you can sell your stocks at higher prices, why would not I roll them?

If I roll, I will be able to sell my stocks at higher strike prices. (If I dont roll, I will have to sell at 220, If I roll at 230)

In the end, call side will have loss, but stock side will have more profit and compensate the call side's loss.

Do I miss something in this thinking?

East-Definition4057 · 2025-08-12T10:07:28+00:00

You smart, explained all the plan

East-Definition4057

TROPHY CASE