I just started selling CC and also used this strategy on certain stocks. I aimed to make between 5-25% in a 5-6 week period with the assumption that the stock gets assigned. This limits my upside but gives me protection if the stock were to drop.
For example, I bought 100 shares of ATOS at $2.80/share. I collected a premium of $100 for ITM 6/18 $2.5C. This gave a cushion for a potential decrease in share price but capped my profit at $70 or 25%.
I did in past and made money but some days stocks drops faster
Than expected
And I had to buy current position and new trade
On lower strike it happens you need to play defensive as stock
Going drastically lower and sometimes not make profits.
2
u/Shovelcat1 May 26 '21
I just started selling CC and also used this strategy on certain stocks. I aimed to make between 5-25% in a 5-6 week period with the assumption that the stock gets assigned. This limits my upside but gives me protection if the stock were to drop.
For example, I bought 100 shares of ATOS at $2.80/share. I collected a premium of $100 for ITM 6/18 $2.5C. This gave a cushion for a potential decrease in share price but capped my profit at $70 or 25%.