Option Dial - Education for Option Traders - Deep in the Money Covered Calls

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Deep in the Money Covered Calls

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http://investing.meetup.com/21... - New York Investing meetup presents Bob Rubin discussing conservative options strategies for a bear market. New York Investing meetup, organizer Daryl Montgomery, is a group of 1800 independent traders and investors that provides unbiased investing education and analysis. We also have a blog, "The Helicopter Economics Investing Guide" which can be found at: http://nyinvestingmeetup.blogs...

Channel: Education
Uploaded: November 30, 1999 at 12:00 am
Author: NYInvestingMeetup

Length: 06:40
Rating: 3.8
Views: 10684

Tags: options  calls  puts  strike  price  deep  in  the  money  volatility  covered  stock  bear  market  strategy  economy  investing  inflation  recession  conservative  

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Video Comments

promoter2010 (November 30, 1999 at 12:00 am)
If you trade covered calls you should have an access to a covered call screener to detect the best stocks that yield the best premiums / downside protection. I use "Options Creme" and I highly recommend it!
anger42 (November 30, 1999 at 12:00 am)
@standardissuemale877 I dont know what brokerage you trade with but most if not all brokerage firms charge commissions...how would they make money if they didn't??
standardissuemale877 (November 30, 1999 at 12:00 am)
@pollux57castor It will definitely be larger than the intrinsic value, otherwise there would be an arbitrage oppurtunity for the ITM option buyer. In other words, they could just buy the ITM call and close instantly to make a profit. This violates the 'free lunch' principle, as it would mean they could make money scott free. furthermore, if ITM calls didn't offer additional value above the itnrinsic value, no one would sell them, because it is in essence giving money away for free.
standardissuemale877 (November 30, 1999 at 12:00 am)
@pravben your calculation doesn't make sense. Based on your example, you would still make a profit of $150 (200 - 25 - 28). Brokers usually don't charge commission nowadays so you can't have a loss of 300+ commissions. Care to explain more?
anger42 (November 30, 1999 at 12:00 am)
This isn't really a good idea because if you write a covered call deep in the money...at the end of the month the contract is exercised automatically by the brokerage firm in most cases if the price of the stock is greater than the strike price. your basically spinning your wheels. If anyone could sell deep in the money calls and not have them assigned then there would be millionares left and right. I'd buy this company at a reasonable price and sell an out of the money call.
studentoflife01 (November 30, 1999 at 12:00 am)
I just got that! :)> Awesome!
BucksSpur (November 30, 1999 at 12:00 am)
@studentoflife01 Jesus Saves, Moses Invests
grperez (November 30, 1999 at 12:00 am)
@ceed4eva Because they paid you a nice premium for that option to buy your stock for less (and that premium is more than the difference between the agreed upon atrike price and what you paid for the stock).
studentoflife01 (November 30, 1999 at 12:00 am)
FUCKIN' JEW!!! :-)> LOL
alter3go (November 30, 1999 at 12:00 am)
@marcmekki The only options you buy when you expect a stock to go down are puts.

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