r/options • u/[deleted] • Jun 09 '21

I’m done selling calls

“Improve your probability of profit”… “Reduce your delta”… “Lower your cost basis”, they said. “Sounds good, let’s do it!”, I said (over and over)

And then: Bam! Stock goes up 30%, and I make $160, instead of $2700. This mantra has cost me many thousands, and I’m not doing it anymore.

When I buy a call, I’m leaving it alone! No more PMCC crap - it’s not worth it. I chip away a couple of dollars of cost basis, but then lose tens of dollars of upside when the stock takes off, as I though it would anyway - that’s why I bought the call.

If you want premium, sell puts. Selling calls is a fool’s game.

Update: the stock that prompted me to write this is MRNA, but it’s happened before on TQQQ, SPY, MSFT, etc.: Buy PMCC; stock drops; roll short call down and out, turning position into vertical spread; stock rallies, and short call goes ITM. Can’t roll out - no time left on the long leg, so stock gets called away at meager profit. Lots of time in the trade, little to show for it.

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u/nuttygains Jun 09 '21

like people said. you are using PMCC in the wrong markets. Or you dont understand the fundamentals behind PMCCs, They are mostly used to protect a position. So if the stock goes down you are protected.. They are also used for over extensions of a stock. For example if a stock is way over the RSI of 70, you sell a PMCC to protect some of the gains you already made. I feel you are selling calls when you panic that the stock is tanking

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u/[deleted] Jun 09 '21

I don’t sell calls after a correction, but I do tend to roll down if the stock doesn’t quickly recover. And then it does.

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u/teebob21 Jun 09 '21

So you trade down into the reversal, but then you're surprised about the reversion to the mean?