WEEKLY COVERED CALLS
The following is a brief statement of why WCCWs work so well. We’re having so much fun exploring this new method. The 50¢ strike prices and the weekly options are about as exciting as any new development in the market as we’ve ever seen.This list will be our topic points for Tonight’s WWW. We hope to see you there. GOOD NEWS ABOUT WEEKLY COVERED CALLS With weekly options available, there is a greater opportunity to write covered calls—a true passive income generator. And with 50¢ incremental strike prices, the profits come fast and furious. 1. The option premiums from week to week are relatively uniform. There is not a huge drop-off. For example, one weekly option chain had option bid (sale price) at 19¢ 22¢ 25¢ 28¢ and 32¢. Look at these numbers. Selling the option out in five weeks would generate $320 (1,000 shares). But, what if we only received one-half of the weekly sale price? That would be about $600 plus, over double the one-week options. A little more work, a lot more profits. 2. Not only do the weekly options give us more profits (that’s what our study and trades say so far), but there are 50¢ incremental strike prices. i.e. $4.50, $5, and $5.50. You don’t know how important this is until you see the new potential profits, and compare it to the old days. 3. We can calculate the profits, even weekly, before we ever decide to Write a Covered Call. The only variable is the movement of the stock. Use protective strategies. 4. We use volatility, either: A. Coming Up on News; or B. A solid rolling pattern. 5. Use charts—preferably 6 months—to ascertain movement, including support and resistance levels. 6. OI, or Open Interest is vastly important. The numbers will keep you out of trouble and in the game to make more money. In short, stocks seem to move to a price where the most options expire worthless. This is why most people lose with regular options. 7. There is time before each Friday expiration to fix any problems—buy-back, roll-outs, etc. These options seem to hang on to their premium right up to the last day, even the last hour. We are making correctable decisions, not just correct decisions. 8. We do these trades so as not to need any movement. We call it No.R.M. No Required Movement. It’s okay if the stock stays right where it is. 9. Don’t forget the 3rd Friday options in your calculations. At that time, it’s just another weekly option. 10. We don’t have to be right for very long. These are 4 and 5-day trades. 11. We can then use the profits to buy more stocks—if the profits are not needed to pay the bills—and continue to build up our income-producing asset base. More profits as we go. © 2017 Wade B. Cook and Wealth Information Network, Inc. All Rights Reserved.