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Step Up To Options

Ep 3.4 - Selling Calls

Step Up To Options

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

We’ve shown you that even though buying a call has unlimited profit, they are less likely to win overall. Selling a call is taking the opposite side of everything buying a call has. The contract wins when the stock price goes down or stays the same, which gives us more chances of success, and the contract gains value as time goes on.

When we write a contract (sell), the max profit we can have is the amount someone pays us for it (the credit received). However, our loss is when the position goes ITM. For a call, that is where the price of a stock goes up past our strike. While it is technically called, “undefined” loss, we discuss what really means.

Selling to open is our preferred method at tastytrade because of the higher chances of winning. While it requires a little more management efforts on our end, seeing a higher probability of profit makes it worth it in the end.

The dough platform has moved to a new brokerage and has a new name - tastyworks! If you visit tastyworks and sign up for a brokerage account, you will be able to use the platform seen in Step Up To Options. Step Up To Options 2.0 featuring the tastyworks platform is coming soon!

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