Tackle Today: Summer Vacation & Covered Calls | Tackle Trading
≈ A perfect match. ≈
In less than 30 days, summer will be upon us. Kids too. It is that time of year that people have been eagerly waiting for. Summer equals hiking, beach, camping, sports, and icy cold lemonades. Wearing Crocs is highly probable.
But it also means a mild 104ºF (40ºC) temperature, mosquitos carrying tropical diseases, dripping with sweat all day long, loss of appetite and having that permanent KFC fried chicken look in the face, always burned and greasy.
Aggravating.
If you are on the West Coast, by the time the market closes, you still have the whole day in front of you. No excuses to not take your kids to spend some energy outside.
But if you are like me, living in the future (EST + 6), it is exactly when the market opens that I have to take my daughter to play. When the market closes is when her day finishes and she will finally hit the hay exhausted. And I don’t have the whole night in front of me.
Here’s the dilemma:
- You can’t be outside all day because you have to trade.
- You can’t keep the kids at home all day otherwise they will turn into Jack Torrance from the “The Shining”.
You’ve got to get creative and formulate your own trading theory:
- Bearish market = X types of strategies
- Bullish market = Y types of strategies
- Neutral market = Z types of strategies
- Kids&Summer market = ?
That’s when conservative strategies like the Covered Call come into play. One that you can execute even in your IRA account with little to no effort.
This will be the topic of tonight’s Cash Flow Club. Not the summer, but the Covered Call strategy from the new Tackle Trading Playbook. You don’t want to miss it.
Chart of the Day: Time Decay Curve
This is a chart took from the Tackle 25 Covered Call system. It shows the results of a simulation we ran on the Tastyworks platform. We’ve simulated the buying of 100 shares of AAPL with the simultaneous selling of a 0.40 Delta call against those shares. Considering both price and volatility of the underlying security unchanged, this is how time corrodes the options contracts price. Melted like an ice cream under the hot sun of July.
Video of the day: What is a Covered Call
A covered call is a combination strategy in which the trader buys stock in increments of +100 shares and then sells -1 call option contract for each 100 shares of stock.
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Originally published at https://tackletrading.com on May 30, 2019.
