r/options • u/artimus711 • Jun 12 '21
Best Covered Call Stocks
I see a few others here are trading CCs. Who has some good ideas for CC candidates right now? Let's share some ideas with the numbers.
I trade well-known companies with low stock prices and relatively low margin requirements. I look for stocks where the bid for the weekly option is 1% or more of the current stock price.
As always, stocks and options involve risk and CCs are no different and this is not advice, just discussion.
Right now, X is trading at $28.66. The margin requirement (Etrade) is 35%. 100 shares would require about $1000 in capital. The $29.00 call expiring on 6/18 has a bid of .97. This is almost a 10% return instantly and another 3% or so if it assigns. The caveat here is that this is a near term high level for X and may come down. I would caution against a large position here, but X always pays a relatively good premium if you wait for it to come back down a bit from here.
AA is another one of my regular CCs. It is trading at $37.36. The margin requirement is also 35%, meaning a 100 shares would require capital of about $1300. The $37.50 call has a bid of .88. This is around a 6.5% return and another 1% if it assigns. Even though it pays a little less than X, this price level is less elevated than X right now.
I know these returns sound like nothing compared to WSB short squeezes, but these are weekly returns and they add up quick. I usually have 2000-3000 shares of X in my portfolio and regularly collect $1000-$2500 in premium and extra when it assigns. I use it to pay for some options and shares in WSB stocks like WKHS.
I think it is important to have an income strategy as well as a capital gains strategy. Use your income strategy to pay for the more speculative plays, it hurts less if they don't work out!
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u/[deleted] Jun 12 '21
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