[B O'Brien]

As a covered call and put seller, you have to have a slightly different mentality to how your portfolio looks. You can’t be greedy, you won’t make every dollar, but you are always making cash. Also, short term cap gains are just part of the game.

Yes, you can miss those 10% runs, but it’s no big deal. I sell weekly calls and puts every Monday morning around the stocks I own. I try to bring in half a percent each Monday in cash, every week. No matter if the market is up or down. I’m trying to bank 26% per year, plus hopefully more because I sell out of the $ calls, usually.

Sometimes one or more my stocks get called away Friday night, no big deal, I already pocketed the option premium. If it made a big run on the week, I can either buy the option back before close on Friday, for very little premium because of the time to expiration, or I can just buy another 100 shares of stock and sell next Friday’s option with 7 days of new time premium on it, aka banking more cash.

When selling weekly put, I only do it on things I am comfortable buying at the price, but I’m pocketing the premium, one way or another. I can always buy out Friday night. I tend to sell these way out of the money, just making tiny %s

Example, I like gold. I just did this.
Bought 100 shares GLD@ 279.70 total $27,970
I sold next Friday $280 call for $300
If it gets called away next Friday, I bank the $300 plus the $30 for shares going up to $300. That’s 1.17% in ten days. I also sold a put for a few dollars.

If gold drops, no big deal, I’ll sell a a call the following week and chip away at the loss and I’m good with owning the gold.

Fees aren’t bad these days, just $0.65 per contract, not like the old days at $8. I’ll literally sell a $5 option, I don’t care, I just want the $4.35, with almost no chance of getting caught holding the bag.

Just an example, but that what I do on 15 or so positions each week. Some may bring in 1.5%, some may bring in 0.2%, but it’s all about the average.

Side note, the cash goes to SPYI, that pays a monthly dividend at 12.77% per year, which is DRIP’d to buy more shares each month when the dividend pays. When the market goes to crap, hopefully there is enough in here to add a new position or bulk up an existing at a good price. Or, straight to the BST when I get the cardboard itch!!!

Bob