What is /biz/ position on covered calls? What is the return? Seems like a decent little return if OTM. (Learning - thanks ahead of time.)
I'm more into the inverse: write, say, a put option and invest the money from the put option into call options. Basically I borrow and then lever.
Covered calls are spiritually antithetical to my position.
>>1257333
Your approach has more risk but way more potential for gains from the sound of it.
>>1257337
It's... money that appears on credit, because you're basically getting paid for the risk of writing an option. Then you're leveraging that risk. It's possible to be totally fucked and wind up in debt.
>>1257333
Why not just buy up Bermuda puts instead then do the same thing? The premiums are less but they cost less than vanilla options.
>>1257323
It's a lot of work and it satisfies a huma desire to sell you something that is growing worthless by the day. The brain chemicals relese dopamine when you sell something for $500 per call 3 month prior to expiry and it declines in value to -0- and you get to brag to your co-workers about how you fucked someone out of $500.
Selling calls (without the underlying) is unlimited risk. Buying calls is fixed risk.
>>1257346
I may be wrong but I don't think you know what you're talking about. Stop saying "writing" just say "selling" when speaking about options. We aren't on the trading floor. Also, buying calls on margin for a stock you don't own equates to unlimited fucking risk. You're a ticking time bomb mate.
>>1257352
Because I'm getting the cash upfront for the options that I'm writing, and reinvesting that in calls if I think a stock will go up. I have no reason to write a Bermudan option because while it may reduce my risk it doesn't yield the cash that I'm multiplying. Buying Bermudan calls/puts would be cheaper, but riskier.
>>1257360
No, writing is different than selling. Writing means that I'm the one who is on the hook for honoring that option if it is called in. Selling would be just selling an option that I've previously purchased.
Vast difference.
>>1257353
Same with covered calls though? Less money?
>>1257374
see
>http://www.investopedia.com/terms/w/writing-an-option.asp
Are you sure you want to keep up this bullshit?
>>1257395
Believe whatever you like mate. But the reality of communication is that I used words to express an idea that you understood, and you want to compare dicks over exact terminology using words that ARE interchangeable when referring to the same thing.
So yeah, fine, put the tape measure away if that's really what you're into m8. We're here to talk about what we do, and if to you that means quibbling far be it from me to take that away from you.
>>1257402
Just use correct terminology when helping somebody learn. OP said in his first post that he was learning this stuff. I'm sure you remember first learning how to trade options and how confusing this shit could get back then. Not being a dickhead just trying to help someone else understand.
>>1257404
That's why I said "writing" instead of selling. Because you can buy an option, see it appreciate in value, then sell it instead of triggering it. It's common with some types of options.
>>1257404
>Not being a dickhead just trying to help someone else understand.
No, you are a acting like a dickhead.
t. impartial observer
Selling or writing an option is strictly the same thing.
