Seller's Paradise

Not all trades work out as intended. We tried to do a 2-day trade with a weekly option. Unfortunately, the stock dropped 9% the next day and we were left holding it after expiration.

So what did we do? We could have sold (take the loss and move on), bought more shares (lower our average cost), or write new options and try to work our way out of it. We actually did a combination. See the reasoning why and how we turned a losing trade into a break-even trade by the following week: Rescuing A Weekly Covered Call Trade.

A few days before Christmas we published an article on 5 stocks that were going ex-dividend the week before Christmas, and related covered call opportunities. If you missed that in time to take advantage of it, now is the time to follow us on Facebook, Twitter, or LinkedIn. We announce new articles to all 3 social networks as they happen, so that's the fastest way to be informed of new postings.

About a week ago Schaeffer did an analysis of heavily shorted, beaten down stocks at the end of the year. Their thesis is that these stocks could get a boost during the first week in January from short covering (by shorts who wanted to defer gains to 2021).

Reasonable theory. So we took their set of 20 such stocks and ran them through our covered call screener to find some in-the-money options on these names. They may not shoot up in January but, if they are less likely to go down because of the deferred short covering, they may be decent candidates for a short-term in-the-money covered call. See the list here: January Short Squeeze Potentials.

Another day, another 3% rise. And so it goes. Every day.

Nice to be long TSLA, but maybe now that it's been added to the S&P500 index would be a good time to take some profits off the table. Or at least hedge a bit with some covered calls (all viewpoints can do this: bearish, neutral, or bullish). Check out the article on TLSA Covered Calls. (and, no, we don't think it will go up another 7x in 2021. Just sayin'...)

For the option holder (the person who buys the call option from the covered call investor), are they better of selling their option or exercising it the day before an ex-dividend date (to capture the dividend)? Does the answer depend on the size of the dividend relative to the amount of time premium remaining in the option? (hint: no)

Turns out that as long as there is 1 penny or more of time premium remaining in the call option, the holder is better off (economically) selling the option instead of exercising it to capture the dividend. Our blog article gives examples of the math done both ways and helps explain this sometimes confusing issue. Sometimes non-rational actors choose early exercise before an ex-dividend date when it's not in their best interest to do so. For details and examples, see Call Options And The Ex-Dividend Date.

Qualified Dividends enjoy preferential tax treatment in the current tax code, while non-qualified dividends are taxed as ordinary income (i.e. higher tax rate). What makes a dividend "qualified"? If you're implementing a dividend capture covered call strategy in a taxable account then you should know. Check out our blog article: Qualified Dividends.

Which is better? More downside protection and less trade maintenance (i.e. monthly) or higher total time premium from a series of weeklys? The answer may not be the same for every investor. In our article we look at some of the issues to consider, as well as name the 8 stocks with the highest weekly open interest: Weekly vs. Monthly Covered Calls.

With about 2 weeks to go until January's monthly options expire, the top 4 covered calls Born To Sell members have written are (in order of popularity):

(Note: Born To Sell members have access to the full Top 10 Covered Call list, as well as having this list update real-time as members change positions. These are not recommendations, they are merely a reflection of our members' current positions.)

Currently, the top 8 stocks Born To Sell members are using for their Watchlist are (in order of popularity):

(Note: Born To Sell members have access to the full Top 20 Watchlist, as well as having this list update real-time as members change their watchlists. And, you can have the highest yielding covered calls from your personal watchlist emailed to you after the close each day. Never miss a fat premium from your watchlist again!)

Born To Sell is dedicated to only one thing: Making Money With Covered Calls. Our subscribers have access to state-of-the-art covered call screeners and covered call portfolio management tools. For less than the profit of a single trade you could be enjoying recurring monthly income using our tools. Three subscription types to choose from:

Plus, all subscriptions begin with a no-obligation 2-week free trial. What are you waiting for? Start collecting premium today!

Happy Trading,

The Born To Sell Team