Nvda selling calls earning 55 usd in a nite with every day taking extra premiums/dividend $16 theta decayJoin me on Tiger Trade!
If I am selling (shorting) this call option, then the theta works in my favor.
From the screenshot:
* Theta = -0.157
* Option price = $9.40
* Contract size = 100 shares
As the seller
The option loses about:
0.157 \times 100 = \$15.70
of value per day, all else being equal.
So if:
* NVDA stays at the same price,
* Implied volatility stays the same,
* Time passes by 1 day,
then the option may drop by about $0.157 ($15.70 per contract), which is a profit for me as the seller.
Example
Suppose I sold the call at $9.40.
Option Price My Profit
$9.40 $0
$8.40 +$100
$7.40 +$200
$5.40 +$400
$0 +$940 (maximum profit)
Risks
My risk comes from:
1. NVDA rising sharply (Delta = 0.513 is fairly high).
2. Implied volatility increasing (Vega = 0.250).
3. Being naked short rather than covered.
Breakeven at expiry
I collected about $9.40 premium.
Strike = $210
Breakeven:
210 + 9.40 = 219.40
If NVDA is:
* Below $219.40 at expiry → I make a profit.
* Above $219.40 at expiry → I start losing money.
If I am selling a covered call (I own 100 NVDA shares), the position is much safer than if I am selling a naked call.
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