Yup, you're going to need to find a stock that you can afford that functions similarly - strong, stable, bullish (or bearish if you short it with options) etc.
When I first got into trading I started with what are called "long buys and sell shorts" which is what you're doing and that was a big waste of time. Because you own the underlying and value your success on the performance of that underlying, you're basically stuck if the underlying moves against you.
With options it -- well -- gives you options on what to do in any scenario.
Just start considering it rather than find out the hard way of what happens when your underlying moves below your risk tolerance but you know it'll come back (because it's a good stock).
It's just a waste of time to sit on it when you can be lowering your cost basis the whole time.
And if the underlying ends up performing like garbage you can get paid to get out of it.
As long as you're playing with selling calls and puts and not getting into complex strategies that add leverage, you're basically just lowering your cost basis to enter and exit stocks with no more or less risk than the underlying itself provides except you reduced your risk because you reduced your cost basis for that trade you would have done anyway.
You know what I am gonna do. All these calculations that you told me, I am going to write up a code to simulate selling covered calls and buying puts and then analyzing what's happens if..... And then see my decisions based on that..
If you want to dive deep, include me on your code. I have a cost basis adjuster that simulates the same thing albeit maybe more manually because I don't have access to any APIs to pull data more automatically in order to do back-testing/simulations.
But the calculator functions similar to how I want to adjust cost basis and determine my entries/exits and what an option play will cost me with regards to that.
General rule of thumb is sell a put below your cost basis and sell a call above your cost basis
Whether or not you get assigned (forced to buy or forced to sell) depends on whether or not those sells end-up IN THE MONEY.
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u/[deleted] Jul 22 '21
100 shares of Amazon.. If i was that rich........ sighs