Covered Call Writing

 
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Weekly Covered Call Options

Weekly Call OptionsEvery once in a while, something really awesome comes along -and weekly options is it for me! It literally turns EVERY Friday into payday. To me, that is fun.

Haven't Weekly Options for Covered Calls Been Around for a While?

Yes, BUT now there are some pretty cool weekly covered call stocks with fat premiums to write - BIDU, Amazon, Apple, Cisco, Research in Motion, Intel, Microsoft, IBM, Netflix, Goldman Sachs, Bank of America, to name a few.

On the ETF side you have the QQQQs (NASDAQ), GLD (premo gold ETF), USO (oil fund), SLV (sliver), along with some leverage 3X funds like FAS (bear) and FAZ (bull). You can go to www.cboe.com for the complete list. There are about 40 now and the list is growing.

Weekly Option Basics

Weeklies come out the Thursday prior to the next Friday expiration. This gives you plenty of time to look at the premiums, see where any current positions are and get a trading plan together.

I usually write the next week on Friday morning before noon EST to capture the premium decreases heading to the close. Many market makers update their pricing in the afternoon. There have been many times you can pick up a 25% time erosion between Friday and Monday morning. How cool is that.

 

Time is On Your Side

Time decay is your friend here. Every day that goes by puts more money in your pocket as premiums erode. It's is so much easier to look out over a week to see where a stock could more versus a whole month. Monthlies now seem like an eternity.

Super Size Premiums

Right now, premiums are high. Last week I sold the Amazon $170 call for $3.55. The next month $170's were about $9.25. By doing weeklies, the total premium is about $14! I also wrote a Microsoft weeky $26 call for $.73. The monthly $26 was $.78 - go figure. Over four weeks that's $2.92 versus $.78. Do the math!

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