Investing

Learn my lesson on selling calls

  • Last Updated:
  • Sep 29th, 2020 9:58 pm
[OP]
Deal Addict
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May 6, 2010
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267 upvotes
Markham

Learn my lesson on selling calls

I think.

After getting a margin trading account, I bought INO, and sold a covered call. Thing dropped by 25%, sold another call. Dropped another 25%, sold another. Fast forward to this Monday, sold 1 more call, K= 11.5 expring in 2 weeks. k = 20 expiring thisFriday. K = 13, expiring October. k = 26 expired last Friday. Current share price was around $10. I guess I can sell as many calls as long as my margin is ok. Worse case, at least I thought - = 11.5 would be assigned and the theta would eat away October call.

Bloody thing got pumped to 18.50, in 2 days. Even the 20 c was not safe. It was now in ITM. Was looking at a potential loss of over $1000. Luckily, thing got dumped today. Closed out my 20 call, expiring tomorrow. Lesson learned. Closed out the position. An extra $ is not worth it.
17 replies
Deal Fanatic
Jul 4, 2004
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Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
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Sr. Member
Aug 16, 2015
665 posts
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par for the course when behaving like a gambler isn't it?
[OP]
Deal Addict
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May 6, 2010
2813 posts
267 upvotes
Markham
1 day!!! @#$@#$ @#$@#$@#4 @#$@#$@#4. 11.50 c, expired Sept 25, share price bounced to 16.94. Today's premarket, 11.02! Couldn't just crash on Friday.

@#$@#$, @#$@#$@#$, @#$@$@#$#.
Deal Expert
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Apr 21, 2004
54002 posts
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So first batch you sold were covered, the rest were naked, correct?

Usually, you sell calls if the underlying may be range bound. Did you sell deep ATM calls, implied volatility would have helped you net good premiums.

I'm also wanting to get back on options trading.
[OP]
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May 6, 2010
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Markham
It started out as covered call. Share price was $22, sold 26c. It dropped so fast that I thought I could leapfrog it from a further expiry date call with lower strike price. When it dropped to $10, I got #$@#$ or greedy, and sold a 2 week expiry date with even lower strike price!!! It got super pumped. I ended up with 2 deep ITM calls and one approaching ATM. Bought the lowest one back, prayed that the 20c won't get assigned and theta saves me on the 13c. Of course, that was last week, expriy date of the 11.5c. Today, it drops as low as 10.28!
Newbie
Jul 20, 2019
87 posts
23 upvotes
You shouldn't sell calls on volatile stocks, SC is for big caps like GOOGL or FB
[OP]
Deal Addict
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May 6, 2010
2813 posts
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Markham
but, but, but they have the most premiums. Face With Tears Of Joy.


BatmoBeal wrote: You shouldn't sell calls on volatile stocks, SC is for big caps like GOOGL or FB
Sr. Member
Jun 13, 2009
671 posts
367 upvotes
Toronto
Why not gamble at a casino? At least that way, your winnings are tax free.
Newbie
Jul 20, 2019
87 posts
23 upvotes
dec12 wrote: but, but, but they have the most premiums. Face With Tears Of Joy.


Jruuu wrote: Why not gamble at a casino? At least that way, your winnings are tax free.
But no tax loss harvast thoFace With Tears Of Joy
Newbie
Jul 20, 2019
87 posts
23 upvotes
dec12 wrote: but, but, but they have the most premiums. Face With Tears Of Joy.


Risk/reward is still the same, sell more calls if you want more premium

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