Tackle Today: Covered Calls for Cash Flow | Tackle Trading
≈ Do you use this technique? ≈
One of the most popular techniques in the equity and options market is the Covered Call. A Covered Call involves the purchase of at least 100 shares of stock and then the sale of 1 call option against that stock. Within our Trading Playbook you can find rules on how to execute the Covered Call, and you can also take the Tackle 25 course to learn all the strategies around selecting, entering, and managing Covered Calls.
In a market like this, where volatility is high, the premiums are going to be attractive to cash flow traders. Have you been trading Covered Calls? If so, you have probably also ran into some of the complexity of high volatility markets. When markets rip higher, your calls go in the money and it requires management and an understanding of what to do and how to read your position. Do you roll up? Do you stand pat and let the market take your stock? These are important questions to answer.
When markets rip lower, your calls lose their premium and can give you an opportunity to manage them by rolling down, out or even buying put options.
Some of the complexity can be reduced at entry as well. If a trader sells a lower delta when entering the Covered Call, it gives more cushion between the current stock price and the strike price you sell. This can reduce the volatility in the call option’s change in price and make the degree of difficulty go down some.
Tonight, on our YouTube channel, Coach Noah will teach some of his favorite was to trade Covered Calls in a market like this, and following that show, Coach Greg will be hosting our Tackle 25 mastermind group for the month.
It’s a night of Covered Call training, and if you use this strategy you should make sure you attend and have you pen and notepad ready to learn some new techniques.
Chart of the Day
D.R. Horton, Inc.
D.R. Horton, Inc. (Ticker: DHI) is one of our Tackle 25 stocks, which is a list of fundamentally strong companies which also optimized for Covered Call trading. It’s pushing resistance today, in an overall uptrend. Learn to trade covered calls with the Tackle 25 system, you can access the list of stocks with your PRO Membership here: https://tackletrading.com/tackle-25-2020-edition/
Video of the day
How to roll a Covered Call
Watch this discussion from Coach Matt, Mark, and Noah on how, when, and why to roll a Covered Call.
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Coaches Show Replay
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
YouTube Special — Covered Calls
Join us for a special webinar with Coach Noah at 7 pm EST on Covered Calls
Tackle 25 System MMG 8:30 pm EST
Join our monthly mastermind on how to trade the Cash Flow Condors System.
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Originally published at https://tackletrading.com on September 30, 2020.