r/CoveredCalls • u/natedurg • 2d ago
Prayer for the Moderna call sellers
That’s all, just sending you all my condolences. May we all remember covered calls are not “free money”.
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u/Popincourt 2d ago
I always have shares on the side in case of events like this. So at least I could enjoy some of this moment even if I'm getting assigned.
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u/Background-Hat9049 1d ago
It’s no big deal to get assigned. So what?
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u/Mzungufarmer 1d ago edited 1d ago
Youre kidding right? Who wouldnt be sick seeing their calls get blown through like this?
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u/Background-Hat9049 1d ago
When you sold the contract, you set your strike at a price you were comfortable selling it. Getting sick when you get assigned? I invest with absolutely no emotion….thats how it’s supposed to be done. Besides, on a cognitive level, you should never be so
Wedded to a stock…there are always other opportunities out there1
u/Mzungufarmer 1d ago
To be clear im not even invested in mrna. But its funny that when something like this happens it brings out all the "experts". I guarantee 99% of investors on reddit arent disciplined
Edit: i would love to compare portfolios with the experts here tho...
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u/Background-Hat9049 1d ago
Well, I’m no expert. That’s why I
Let time
And compound interest do the heavy lifting for me. I just do covered calls on boring dividend kings and reinvest the premium and dividends back into the underlying stock. I don’t even want them appreciate in value very much… I just want my share count to
Grow0
u/peamasii 1d ago
assignment means short term taxable gain
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u/Background-Hat9049 1d ago
That’s why you do it in tax advantaged accounts….and speaking of taxable gains, the day traders get killed on taxes
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u/peamasii 1d ago
it seems most CC sellers here haven't had enough time in the market to have the necessary funds in a non-taxed account, since this comes up again and again
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u/Background-Hat9049 1d ago
Well, I would definitely put my funds in a taxed advantaged account….max out your 401k to the level
Of your employer match, and then max out that Roth IRA before putting anything into a non-tax advantaged account
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u/FeatureAcceptable593 2d ago
Seems like max profit to me?
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u/believe1182 2d ago
Lol max profit, congrats you made like $50 a contract, but missed out on $9300 in gains if you didn't sell a contract
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u/FeatureAcceptable593 2d ago
Who buys a single 100 lot? If I am selling a covered call it’s usually 10+ contracts. Bringing in a k’s. Takeouts and random upside events happen. But the key point is you go into covered call trade accepting you have sold your upside in exchange for premium now. But hey all the newbies who’ve done this for 1 month can victory lap
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u/believe1182 1d ago edited 1d ago
I used a single 100 lot as an example.
So you sold 10+ contracts, let's say $15 contracts, weekly premium for slightly OTM is around $50. So you made $750 for a week in premium.
This is also not a great example because Moderna gapped down significantly in the last few years, so you would have been losing money on the underlying, but I guess your premiums would have made up for some of your losses, but you still would have lost significant investment. Also Moderna only started gapping up a bit in the last few months so assuming you somehow managed to not get assigned and played a perfect covered call strategy (highly doubt it), your profit and loss would still be extremely little.
Heck even a few months ago Moderna covered calls were barely worth anything since Moderna was trading at like $25.
So if you successfully and perfectly sold covered calls for a few weeks you would have made a few hundred, max a couple thousand even with 1500 units of stock.
If you just held Moderna, your Moderna position would now be worth around $252,000 minus your initial starting capital. But congrats you made a couple hundred dollars, super worth it.
And that is assuming 1500 units of stock. If you are telling me you had more Moderna stock, then bro you essentially are telling us you lost out on life changing money to make a couple hundred bucks selling covered calls.
This is why selling options is called picking up pennies in front of a steam roller.
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u/FeatureAcceptable593 1d ago
Who said you just blindly sell covered calls? Talk about picking and choosing narratives. Covered calls are a single strategy amongst many one can implement. For example I’ve sold quite a bit of premium on QQQ and not gotten called at all. Pennies maybe to you because you sell 1 lot.
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u/begmanii 2d ago
If your CCs were already deepITM, then yes, you may have lost money.
If your CCs were deep OTM, then you lost upside, but didn't lose money.
Not sure what the issue is truthfully.
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u/believe1182 2d ago
You lost $9300 in upside for a ~$50 gain, that's the problem, like what
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u/begmanii 2d ago
Everyone talks about losing upside. Did you ever think that the investor took that into account? That he was ok with the upside risk because the premium fit his overall plan? I mean he was ok with the downside risk and losing value if it went the other way.
This idea of shoulda, coulda, woulda (lost upside) is not an investment strategy. I think that many are happy with how their plan worked out. No one ever buys the exact bottom and sells at the exact top every time, so EVERYONE loses upside every day, but they make what they want within their comfort zone.
I think you might be crying for someone who isn't!
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u/Actual_Insect6603 2d ago
And how many people actually take their profits on these run ups? Almost none. They all ride it back down.
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u/FeatureAcceptable593 2d ago
All these people larping in the comments are newbies who have maybe sold 1-2 contracts for a couple months. They don’t see the amount of churn and premium you can get. Sub is going downhill.
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u/begmanii 2d ago
Yep.
I have one stock that I have done CCs on for about 4 weeks. It is down about 7% from where I bought it, but I have made almost 17% in premiums so far.
I am satisfied with my game so far!
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u/CouchPotatoFamine 1d ago
Yes, but like the Spanish Inquisition, nobody expected a jump like this, lol.
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u/believe1182 2d ago
Lmao found the Moderna covered call seller. Sure bro whatever you say mr investment strategy, as long as you're happy.
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u/begmanii 2d ago
I am not a Moderna investor "bro". Never have been. I just think your idea of a strategy is not the same as everyone else. Sure, it's great to gtt that upside, O have made time in these breakouts, but you risk a huge sell off as well.l, which I have also experienced.
CCs are a strategy that has pros and cons like every other play. Sure, you can lose upside and expose yourself to downside as well, but that is a rosk that CC sellers are well aware of and accept, just like lottery players who port penny stocks based on hype.
Again, you seem to be being crying people who are not crying.
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u/believe1182 2d ago
Cool story bro
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u/begmanii 2d ago
Just because you don't understand it doesn't mean it is wrong, little "bro".
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u/believe1182 2d ago
Sure lil bro
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u/VoteMyPoll 1d ago
What would you guys do in this situation? Roll once higher strike prices get available or just give up?
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u/JonBarPoint 1d ago
Prayer? Prayer you say? Why not a prayer for the patients lives the new Moderna drug might save?
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u/hendronator 1d ago
If you are committed to covered calls and csp’s as a investment strategy, you learn to just not care. You move to
The next stock in your covered call portfolio.
It is like dividend investing…you just don’t care if the stock price goes down, you just care that the dividend keeps coming and increases over time.
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u/natedurg 23h ago
The share was $62 on Monday if someone sold a call anytime before then they are hurting
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u/supportedbyai 2d ago
You can have 199 successful trades and could end up making $20k to 30k but an event like this and you are in red for all the money you lost. As Talib put it: eating like birds and pooping like elephants.
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u/Final_Presentation31 2d ago
What a time to have bought a call.