Title: 3 Key Factors for Choosing a Covered Call CandidateHey, Dan Passarelli here. When I’m trading covered calls, I focus on three major factors to find the best candidates: 1️⃣ Stock Price Over $30 – Options are priced as a percentage of the stock, and lower-priced stocks lead to options trading in pennies. That can make commissions and bid-ask spreads eat away at potential gains. 2️⃣ Overpriced Implied Volatility – When first setting up a covered call, I like to sell options that are overpriced based on implied volatility. This gives me the best premium. 3️⃣ Stocks I Want to Sell – I only sell calls on stocks I’m OK parting with. If the call gets exercised, I can always turn it into a wheel trade by selling a put later. That’s my process! Keep these in mind to trade smarter. #OptionsTrading #CoveredCalls #SmartInvesting #TradingTips Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD) which can be obtained from your broker; by emailing investorservices@theocc.com; or from The Options Clearing Corporation, 125 S. Franklin St., Suite 1200, Chicago, IL 60606. The content posted by our authors is intended to be general education and / or general information in nature. We are NOT providing advice for any individual trader. No statement made by our authors or subscribers is intended to be a recommendation or solicitation to buy or sell any security or to provide trading or investment advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.You’re currently a free subscriber to Wealth Building with Options. For the full experience, upgrade your subscription.
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