How far out (DTE) do you sell covered calls and at what strike price. I'm holding quite a bit of NVDA, which is extremely liquid. I sold 15 contracts this morning (or will at the open) for 150, 3DTE (weekly). Net will be about $1475. Is there a better strategy? I really don't want to part with my NVDA, so I'm choosing very short DTE and fairly significant gains.
Your thoughts?
FWIW, these are in my Roth IRA, so no concerns about capital gains.
Posted by QuesoHusker
2 Comments
Your sell them at the strike price you’re willing to sell the stock at, the lower the strike price, the higher risk of your stock being called away. If you want the stock, you shouldn’t be selling calls on it in the first place.
Selling a call is giving someone else the option to buy NVDA from you at X price. You want to get the premium without the obligation that comes with it… It doesn’t work that way.
It’s depends on your goals and your risk tolerance. I usually do my covered calls the same as selling puts, around 14-21 days out to start capturing the quicker theta decay.