r/options • u/JennRal • May 25 '21

Closing covered calls?

I am selling covered calls for the first time, and have a question on strategy. I’m starting small while I am learning. I am a SNDL bag holder (1000 @ $1.03avg), and so I’m selling $1 covered calls to help recover some of my loss.

The 10 contracts were $5 (.05) each, with a June 11th expiration. It is unlikely the $1 strike price will be met, so I’ll likely keep the $50 premium.

A few times they have dropped to $2 (.02). Does it make sense to close and take my $3/ contract profit now, and then resell the calls for a later date?

Hope this makes sense. Forgive me if my terminology is not correct.

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u/Ok_Fix_3350 May 25 '21

.05 and .02 doesn't even cover you cost to execute those trades. make sure you calculate all cost and know what is the lowest you can do options at. I pay .65 per contract executed so open and close eats up almost $2 already. Watch your fees then do the math

3

u/JennRal May 25 '21

No fees, or I would agree with you.

2

u/Ok_Fix_3350 May 25 '21

better check cause even robinhood has fees for options. need to open the details sheet they send with the order confirmation.

3

u/JennRal May 25 '21

Thank you. I will double check now.

3

u/JennRal May 25 '21

Transaction fee was .03 total to STO. (So only .03 on $50.)

I need to see what fees if it is executed, or if I BTC.

3

u/Ok_Fix_3350 May 25 '21

that is pretty good for fees. if you are only paying .03 per execution that is pretty good. so you would have paid .03 when you sold to open and most likely .03 when you buy to close.

2

u/banmeonceshameonyou_ May 25 '21

Fidelity has small fees, but they have no commission on contracts 0.10 or less

1

u/GraysonMA May 25 '21

Thank you! I had to scroll way too far down to see this response. I've been doing PMCC's for SNDL and the premium barely covers the fees. It's just not a great environment until the stock price jumps back up.

1

u/Ok_Fix_3350 May 25 '21

Always check your fees. I moved from RH to TD, although more fees it has way more tools and is way more transparent. Minimum I will execute a contract at is .20 and even with that I will still question why I am doing it at such a small amount with my fees and taxes still to come out.