22/2 options puppy premarket thoughts
22/2 options puppy thoughts and plan
Generating Premiums with Covered Calls: My IBIT Strategy
Covered calls are a powerful tool for generating consistent income from an asset you already own. In this case, I traded covered calls on IBIT while holding 100 shares of the ETF, taking advantage of its current price movements. Let’s break it down.
What Are Covered Calls?
A covered call is a strategy where you sell call options against your existing stock or ETF holdings. This allows you to earn a premium, which provides additional income. The catch? If the price of the asset rises above the strike price of the call option, you may have to sell your shares at that strike price. It’s an excellent way to generate returns in a neutral to slightly bullish market.
My IBIT Covered Call Trades
As IBIT trades at $59.80, I identified $71 as a key resistance level. This means I’m comfortable selling calls with a $71 strike price because I believe it’s unlikely IBIT will exceed that price significantly before the option expiration.
Here’s how I executed my trades:
1. Sell Calls: I sold multiple February 2025 call options with a $71 strike price, collecting premiums of $1.52, $1.53, and $1.50.
2. Buy Back for Adjustments: To lock in profits or adjust my position, I bought back one call at $1.50 and later adjusted another position at $1.20.
This approach allowed me to earn premiums while maintaining flexibility in managing risk.
Why This Works
With IBIT’s current price unlikely to exceed $71, this strategy lets me profit from time decay and small price movements without losing my shares. Even if the ETF rallies slightly, my strike price provides a cushion, and the collected premiums boost my returns.$IBIT 20250228 71.0 CALL$
Covered calls are perfect for enhancing income while holding long-term positions. For IBIT, this strategy delivered steady gains and added to my overall profitability.
Thanks for the support
Modify on 2025-01-22 22:15
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