Re: Call Buyers Punished
iN_aT_tWO, just like BLeaguered, I haven’t sold calls on Insmed, because I don’t want to get called and lose my stock. I do, however, sell plenty of calls, and I think everyone should learn how to.
In November I purchased CLNE at around 5, and immediately sold the December 5 calls for 50 cents. That is like a 10 % option premium - for a month! OK, so the stock was around 9 on option expiration and I got called at 5 leaving thousands of dollars on the table. The thing is, I was doing the trades for INCOME, and I just had to blockout how far the stock ran.
I made similar moves with a few other stocks in November, and every single one got called, but my income just on the option selling portion of my stocks was somewhere around 8%, just for that one month period.
Fast moving stocks have the highest option premiums, so someone selling options to generate income has to have a strategy not to get badly hurt. I would be happy to share the strategy that I use, but don’t think the whole board wants to know it. If you are interested just send me a PM.
Selling puts, as BLeaguered shared with LT regarding SRNE is another fantastic income strategy.
With interest rates close to 0, it’s easy why I say that everyone should learn some option SELLING strategies.
I will let the board know if I ever sell Insmed calls..... the big buyout would be certain to happen shortly after.