Today, the Fed announced no changes to interest rates, but the real impact comes from what they say next. Their guidance can cause market swings, which is why I often advise avoiding covered calls and cash-secured puts around major events like earnings or Fed statements.
Why? Because volatility can move stocks unpredictably, potentially pushing past your strike price and leaving too much value on the table. But are there times when selling covered calls or cash-secured puts before an event makes sense? Absolutely.
With heightened volatility, options premiums increase, giving you two strategic choices:
1️⃣ Sell your usual strike for a much bigger premium.
2️⃣ Sell a further out-of-the-money strike for the same premium as a closer strike.
If you have a target price independent of the Fed’s decision, this can work in your favor. Whether you're looking for income or planning an entry/exit, these strategies help manage risk while making the most of market conditions.
#OptionsTrading #StockMarket #CoveredCalls #TradingStrategy
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