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No. of Recommendations: 4
Hi stocknovice,

Unfortunately, my red weeks are when the value of the stocks I'm holding drop more than the value of the premiums sold for the week. I don't even look at opportunity loss.

Right now my goal is to grow the entire port. Everything I bring in as far as premiums gets added to my cash reserve. If a stock gets assigned the money goes into the cash reserve also, but when that happens I need to purchase more in order to keep the premiums at the level I want. When I have a red week like last week, I'll deploy some of the cash. As the port grows, I increase the amount of premiums sold. My overall goal is to get good enough at this to create an income stream once I retire.

Hope that makes sense.

Darryl
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No. of Recommendations: 0
Nicely done.

Are your "losing" percentages simply the amount of appreciation you missed out on for the shares that were called away?

What is your strategy with the cash you receive for exercised calls?

Thanks.
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No. of Recommendations: 7
Thanks for reading,

Thanks for writing!

I too have been quiet for a time pondering the results of both The Captain's ARK and covered call writing. Of the two, covered calls seems to be the more manageable approach. The rotation into "value" really hit hard while the covered calls mitigated the hit. The bottom seems to have been around mid May, 5 or 6 weeks ago. At the bottom my port was just underwater on a rolling annual basis but up around 25% after adding back in the money I took out for living expenses and to fatten up the reserve piggy bank which is what one should do during roaring bull markets.

I still have most of my original ARK stocks. Of all the stocks in the market TSLA is my highest conviction long term position to which I have been adding in May (33%) and in June (50%) mostly with cash from covered calls. Here is what my stocks have been doing during the past two years. I used this longer timeframe to have a better perspectve.

BEAM: https://softwaretimes.com/pics/beam-06-19-2021.gif
DMTK: https://softwaretimes.com/pics/dmtk-06-19-2021.gif
ENPH: https://softwaretimes.com/pics/enph-06-19-2021.gif
FATE: https://softwaretimes.com/pics/fate-06-19-2021.gif
NNDM: https://softwaretimes.com/pics/nndm-06-19-2021.gif
PACB: https://softwaretimes.com/pics/pacb-06-19-2021.gif
TSLA: https://softwaretimes.com/pics/tsla-06-19-2021.gif
VUZI: https://softwaretimes.com/pics/vuzi-06-19-2021.gif
XONE: https://softwaretimes.com/pics/xone-06-19-2021.gif

A key point to consider with covered calls is premium vs. opportunity loss. This tension is greatest with high growth stocks like the ARK portfolio. During the recent bull run I practically stopped selling covered calls. Now that the bull has been tamed I expect to return to selling covered calls quite aggressively.

A key difference between The Captain's ARK and covered calls is that the ARK shows how bullish the past was while call premiums show how bullish Mr. Market is today. I think covered calls are the better predictor of the two. I want to find a way to combine the two...

--------------------------------

The spurt of growth stocks in 2020 was a once in a lifetime experience or two if you are old enough to have lived the dot-com, Gorilla Game bubble of the late 1990s.

30 year NASDAQ: https://softwaretimes.com/pics/comp-06-19-2021.gif

The most important lesson I learned from the dot-com bubble was to avoid stocks that don't bounce back. The three year bear market following the bubble was littered with bankruptcies, mostly story stocks with no real business but also some that were killed by Moore's Law like increases in productivity that caused prices to drop too swiftly to be able to pay off the capital investments, the most notable being optic fiber communications. Two decades later satellite based internet might become a viable business but back then Iridium, GlobalStar, and another such venture went belly up. GM's EV1 was also of that era (1996 to 1999) but practical EVs had to wait another two decades to start becoming a reality. In practical investing terms, wait for the technology to "Cross the Chasm!"

--------------------------------

Last week I switched tactics to full steam ahead with covered calls. I sold positions that didn't have good covered calls and this week I expect to add new positions (CDNA, NTLA). I expect premiums to cover about four times my monthly expenses. BTW, most ARK stocks don't have weekly options.

CDNA: https://softwaretimes.com/pics/cdna-06-19-2021.gif
NTLA: https://softwaretimes.com/pics/ntla-06-19-2021.gif

Denny Schlesinger
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No. of Recommendations: 3
My main strategy over the past 6 months has been covered calls on positions that I’m happy to own long term. Essentially, this is my downside protection (long term ownership) and yes, the danger is that I potentially miss out on large runs.

I’ve tried to sell calls at the 30 delta 28-40 days out (rather than doing short term weekly calls). I usually buy back at 50% profit if realized before half the days to expiry at time of selling the call.

For stocks with higher growth potential (my estimate), I might sell calls with lower delta. If I think a stock has had a large run up, I may sell a higher delta.

Like predicting the market, I am maybe deluding myself I can predict. Selling NVDA and FUBO calls with a 30 delta with 40 DTE saw me “lose” some upside gain; though others have worked just fine such as CCs on MGNI and TSLA.

I have thought about selling cash secured puts on these very stocks since that is my “downside protection” but to some degree I fear the “big correction” and have heeded Captain’s warning that this was painful for him in the dot.com bust.

Overall, I do NOT need to chase alpha. I need to continue to generate living expenses from the overall portfolio. So I further refine my strategy balancing safety and more aggression than sitting in bonds and other low interest generating vehicles.

And I’m learning from all of you. I’d love to see the discussion ramp up around here again.

RWW
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No. of Recommendations: 2
By the way the main basket I’m trading options against (mostly CCs and some cash secured puts) are below. About 5-6 are on companies that I’m essentially selling near the money calls as I’m trying to exit* so I can focus on a smaller list.

CRWD
DDOG
NET
PATH
SNOW
NVDA
AMD
LRCX
SHOP
U
MGNI*
CCIV*
FVRR*
PLTR
ROKU
SNAP
ZI
BAND*
FUBO*
OKTA
TSLA*
TWLO
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No. of Recommendations: 4
Hi stocknovice,

Unfortunately, my red weeks are when the value of the stocks I'm holding drop more than the value of the premiums sold for the week. I don't even look at opportunity loss.

Right now my goal is to grow the entire port. Everything I bring in as far as premiums gets added to my cash reserve. If a stock gets assigned the money goes into the cash reserve also, but when that happens I need to purchase more in order to keep the premiums at the level I want. When I have a red week like last week, I'll deploy some of the cash. As the port grows, I increase the amount of premiums sold. My overall goal is to get good enough at this to create an income stream once I retire.

Hope that makes sense.

Darryl
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