Opinions on a covered call option trading strategy?

[funkybeats]

What are your opinions on a covered call option trading strategy, not as a main investment strategy but as an small addition to my core strategy knowing that if I see a drop in price of the stocks I would be holding them anyways?

Thanks,

FB.

[NUTS]

good idea

were you going to do covered calls for one month or longer & was your thinking at the money, out of the money or in the money

Is the stock that you ar considering doing this on volatile

Do you pick stocks that have dividends as well as options

If you end up doing what you're thinking - have you thought about what-if you get called and the next step after that or if the stock drops more than the option money what you got from selling the call

[funkybeats]

I was going to do covered calls for around 6 months terms with dividend paying stocks that I feel I would not lose on long term if I was to hold them anyways. The stocks wouldn't be too volatile but would be stocks people would be betting to rise (some resource, some financial). I'm not worried if the stock drops more than the option money since I would hold it anyways and write another option (if viable).


Thanks,

FB.

[funkybeats]

Could I do this inside a TFSA?

Maybe through Questrade?

FB.

[Archanfel]

I was going to do covered calls for around 6 months terms with dividend paying stocks that I feel I would not lose on long term if I was to hold them anyways. The stocks wouldn't be too volatile but would be stocks people would be betting to rise (some resource, some financial). I'm not worried if the stock drops more than the option money since I would hold it anyways and write another option (if viable).


Thanks,

FB.

The only thing you have to remember is there's no free lunch. You will always be trading something off. In this case, future growth for option premiums.

[dealzuser]

Could I do this inside a TFSA?

Maybe through Questrade?

FB.


You cannot short options contracts in a registered account.

EDIT - You can write covered calls in a registered account. My mistake.

I'm really bad at writing call options, because I'm generally too afraid to miss the next run up. My strategy is writing short calls on big up days, and long puts on big down days. TDW rips you off when exercising the option. My commission on 1300 shares of Company XYZ at $13 was over $300!!!

[winstona]

You cannot short options contracts in a registered account.

That's true.

But I always thought covered call is allowable (It is not "Naked") in a registered account. Although I haven't done it myself, but I recall reading it somewhere.

[dealzuser]

That's true.

But I always thought covered call is allowable (It is not "Naked") in a registered account. Although I haven't done it myself, but I recall reading it somewhere.


Winstona,

I believe you are correct. Covered calls are allowed options from my TDW TFSA and RRSP accounts. I will correct my previous post.

[funkybeats]

So, since I'm not going to trade actively (long covered call options) would I be better off opening an account with a discount brokerage like questrade to save on fees? The problems they have with customer service and network availability shouldn't affect me much since I'm only making a couple of trades every three months or so and they're way cheaper than TDW.

Thanks,

FB.