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Covered Calls at Varying Deltas

Options Jive

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Covered calls are one of the most common ways people trade options. Today Tom and Tony look to give some context around this classic strategy.

A Covered Call is a combination of a long stock position and a short call position. This trade can benefit in all market environments. If the stock goes up, our call will show a loss but we benefit from the gains in long stock, if there is no movement we collect the premium, and if the stock goes down we lose on the stock but the premium can help offset loses.

Covered Calls tend to outperform in neutral and bear markets and underperform long stock in strong bull markets, we wanted to test selling calls at varying deltas allowing for more or less upside participation. The data went from 2005 to present selling 45 DTE Covered Calls. Be sure to tune in for the results!

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