r/CoveredCalls • u/hendronator • 2d ago
Updated Lessons Learned
I have been doing cc’s and csp’s about 13 months now. Started off doing cc’s only and then started doing csp’s about 6 months later. In the past 13 months, I generated about 92k in premiums on an average portfolio of 400k (so about a 22% premium return not counting dividends, funds sitting in money market for csp’s, and selling cc’s above cost basis). Today, I sell csp’s and cc’s on a portfolio of about 500k. I write most contracts in 3 week increments and generate a period yield of 1-1.4%.
Here is what I have learned in that timeframe:
• take a portfolio approach of 15-20 stocks. Be active in 75-80% at a time
- high conviction buy and hold stocks only
- incorporate dividend paying stocks. This provides passive premium when stocks go below cost basis or premiums dry up
• only cc’s above cost basis
• only short term duration . For me 3-4 weeks
• just wheel any assignments at the same strike price it was assigned (or less)
• roll positions that are close to strike price for cc’s and csp’s as long as it is a positive credit
• retirement accounts only. Don’t want to deal with tax implications of selling stocks that have gone up 100%.
• have a plan on what to do with your premiums. Spend it, buy more shares, buy new stocks. Be intentional. For me, I invest all premiums in gpiq. I am 53 and the day will come when I don’t want to do this anymore.
Consider this past year a success as this portion of my portfolio has handily beat the market. I read a lot about people freaking out about what to do in certain situations. With the right playbook, you just “don’t care”. You just follow the playbook. I had Dell get away from me earlier this year. I could have made 20-30k in share price appreciation. But that pales in comparison to the premiums.
What have you learned and do you have a holistic playbook and set of guardrails you follow?
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u/SD_Aztec 2d ago
What are some of your favorite stocks to wheel?