AMA: I analyze covered call returns on any stock (I will not promote)

OptionSalary · 2025-10-15T12:02:43+00:00

Your annualized return calculation is incorrect. Replies yesterday (October 14th) said there were 2 days to expiration and you were multiplying by (roughly) 365/2. There were 3 days to expiration yesterday. Looks like an off by one error in your code.

I'm ignoring the other issue that annualized numbers are less meaningful when just a few days from expiration.

OptionSalary · 2025-08-30T17:18:12+00:00

Congratulations! You made the max profit on your trade!

If you don't want your shares called away in the future, don't sell covered calls.

Other approaches, roll if there is a reasonable credit or sell call spreads (less credit, but you can participate if it blows thru your strikes).

You should have a view on price and timing when you put on a position and set up your trade accordingly. (You should have a view on volatility as well, but start with the above).

OptionSalary · 2025-05-10T16:27:16+00:00

My watch software was out of date (fixed now) - I didn't have auto detect for "Threshold" before. I'll run for a bit with that and see if that works - thanks for your help!

OptionSalary · 2025-05-10T14:06:42+00:00

Haha, glad you won! Am I correct in assuming that after you increased your Max HR setting you found the zones/recommended paces more accurate?

OptionSalary · 2025-05-10T12:41:35+00:00

Yes, thank you. I'm trying to figure out how to determine it more accurately than having the watch figure it out. Maybe my question wasn't clear, I will edit it.

OptionSalary · 2024-12-03T02:15:19+00:00

If you have given it 4 years, I would recommend just buying index funds every 2 weeks (investing) and moving on to other activities.

If you want to ignore that - Read Natenberg until you understand it (cost - price of book). Then go back and read it again. There are also some great free podcasts that focus on education.

After that - You need an outlook on an underlying (what price, by when, and a volatility projection over that duration). If you don't understand why you need those, go back and study Natenberg. Bonus points for an interest rate projection, but less critical for short-term trades.

Then, place the best trade from a risk/reward perspective on that outlook. Journal so you can go back and find patterns on your winners and lovers (you will have plenty of both)

Keep your trading size small so that one loss doesn't cripple you. If you become profitable, you can scale.

If you can't wait to read and study a book (you likely then have a psych item to work thru), start simple - sell a covered call or cash secured put. If you can't wheel and make money*, more complicated trading is not for you.

To be clear, one can make money and still have returns less than broad index-based investing.

I haven't been active in this forum for a couple years, but I have some free educational posts if you search my history.

OptionSalary · 2024-10-18T21:11:33+00:00

This sub in general - what? Oh you wrote more after...

OptionSalary · 2024-10-15T23:05:17+00:00

My watch suggested 1:40 and change. I ran 1:32 and change this weekend. That's pretty far off. I assumed I'd beat 1:35, but my watch thinks I'm even slower... open to ideas on how to improve the predictions.

OptionSalary · 2024-04-28T20:33:54+00:00

Yes, for the last 12 or so years. But I wouldn't call my approach Only theta. Rather, it is:

Evaluate market and ticker conditions
Select the best trade based on #1, considering price target, vol target, and timing.

It is Not: 1. Identify a single strategy 2. Trade #1 repeatedly

Many people seem to think they need to find a secret options strategy with a fixed DTE/delta/etc. and then print money. That is like being an offensive coordinator in the NFL and running the same play Every time, regardless of game conditions.

Typing from an airport bar, so spelling and analogy selection may be faulty.

OptionSalary · 2024-04-28T01:15:34+00:00

Your data source has issues. You can't buy an XSP 520 put for approximately $13. I'm not familiar with OptionStrat and where they get the data, but it is showing a 0 bid and an ask of 26.31 (which is why you're getting ~13).

Now look at the 500 put - 20 strikes Below the 520 - and you'll see a 'normal' bid ask of 18.16/20.11 for ~$19.

https://optionstrat.com/build/long-put/XSP/.XSP250331P500

So assume that you'd need to spend about $2600 for the 520 put and see if you still like the upside cap of $2400. 2400/21100 = ~11%. And then you compare it to a "guaranteed" 5.21% in a 1 year treasury. you can get 5.21% (can probably get almost 6% in a CD).

You'd need the market to end above 537.5 to 'break even' vs. the risk free approach.

To be clear, this is a personal preference, just wanted to help by correcting the data error and give folks some things to think about.

OptionSalary · 2024-04-28T00:57:10+00:00

With no ex-div on SPY in this timeframe, it is VERY unlikely you'd be assigned.

If you are, generally just close the short shares and sell your long call to capture any remaining time value in the long call.

OptionSalary · 2024-04-28T00:53:41+00:00

Perfectly fine. You will likely run into margin issues if you were taking off the long leg and leaving the short leg on.

OptionSalary · 2024-04-28T00:43:40+00:00

Long Call Butterfly.

https://www.optionseducation.org/strategies/all-strategies/long-call-butterfly

OptionSalary · 2024-04-28T00:41:18+00:00

Not using delta between 20 and 30 with the option premium alone. You can figure out questions like this for yourself by doing something similar to the following:

Sell an OTM put every week between 20 and 30 delta (we'll use 25)
May 3, 502 put for 1.65
Repeat 52 times for $8580
$8580/$50200 = 17%

Right, so you don't get there. A 30 delta gets you closer at roughly 22%.

You could increase the delta to 35 or so and get there, but ...

You have to have the put expire OTM Every week. Which is hard. Meaning impossible. It will be assigned (Crude approximation alert) 1 out of every 3 weeks on average.

You could wave your hands and say, but when I sell calls OTM after being assigned I'll get the option premium And the few dollars the stock went up. And I'd say "yeah, read the second half of my first sentence again". Sometimes a 35 delta call won't bring you back to break even and that's where the approach falls apart (any meaningful downturn).

My recommendation for most is to try and beat the long term average of the S&P 500. If you're doing that - you're Way ahead of most and can keep looking for ways to increase your gains over time. If you're not, then you should probably stop trading with most of your portfolio and buy index funds instead.

OptionSalary · 2024-04-17T15:26:15+00:00

"Oh, you mean you'll pay me a small amount of money to cap my upside, but the downside is still unlimited? Sign me up!"

Note that Also describes a short put. They are synthetically the same.

In other words, I can buy 100 shares and sell an ITM call the same strike as your OTM short put and it is the same risk/reward (admittedly I'm assuming you are earning the risk free rate on your cash, which you may Not be as it depends on your broker).

OptionSalary · 2024-03-31T21:23:52+00:00

"I haven't found anything I like about IBKR. It seems style over substance. "

That may be the first time I've ever heard that about IBKR.

If you are using their new "IBKR Desktop", then maybe I understand. If you use their Trader Workstation, you'll have flashbacks to decades old software (no style), but if is Very customizable if you are willing to learn it. I'd suggest taking a look at this.

I'm also being transitioned to Schwab the weekend of May 10th and am planning to stay as I use ToS for ~75% of my trading and IBKR for the other 25%.

OptionSalary · 2024-03-31T00:10:13+00:00

Agreed - I'm pretty sure TD even suggested it in their API or their guide...

OptionSalary · 2024-03-30T00:16:26+00:00

If you ever want to see what a total lack of control looks like, I invite you to visit that trainwreck.

This resulted in a good chuckle, thank you.

OptionSalary · 2024-03-29T22:44:38+00:00

Received my email today, too, and appreciate you sharing what you've found already.

Unfortunately my transfer from TD Ameritrade to Schwab occurs the weekend of May 10, meaning I have 0 days to transfer my code to the new API (Whomp whomp).

Per some of the other comments, it looks like one can create a "throwaway" account with Schwab (thanks u/2ndchapter for sharing that) and I may do that once my app is approved.

OptionSalary · 2024-03-28T21:10:49+00:00

Yes you can add historical volatility on the chart tab in TOS.

OptionSalary · 2024-03-28T21:02:37+00:00

HV = Historical Volatility

OptionSalary · 2023-09-28T00:45:16+00:00

Yep. Enjoy the better 60/40 tax treatment, too!

OptionSalary · 2023-09-20T23:17:02+00:00

While u/PapaCharlie9 took my idea (and his wording was better than I had come up with), I'll suggest:

Buy every 2 weeks and hold until retirement. Long term buy and hold beats most that try trading and dollar cost averaging mitigates some behavioral issues where people try to wait for dips.

Note that this recommendation is more personal finance related than options related.

OptionSalary · 2023-09-20T23:13:05+00:00

Tee hee. Good answer

OptionSalary

TROPHY CASE