3 Covered Call Criteria

Title: 3 Key Factors for Choosing a Covered Call Candidate

Hey, Dan Passarelli here.

When I’m trading covered calls, I focus on three major factors to find the best candidates:

1️⃣ Stock Price Over $30 – Options are priced as a percentage of the stock, and lower-priced stocks lead to options trading in pennies. That can make commissions and bid-ask spreads eat away at potential gains.

2️⃣ Overpriced Implied Volatility – When first setting up a covered call, I like to sell options that are overpriced based on implied volatility. This gives me the best premium.

3️⃣ Stocks I Want to Sell – I only sell calls on stocks I’m OK parting with. If the call gets exercised, I can always turn it into a wheel trade by selling a put later.

That’s my process! Keep these in mind to trade smarter.

#OptionsTrading #CoveredCalls #SmartInvesting #TradingTips

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