Retail investor: I sell covered calls for income. Made $1,400 in premium this year on my shares.


Me: Any of them get called away?
Retail investor: One position, yeah. It ripped right through my strike in the spring.
Me: So run the real math for me. How much did it keep running after they took your shares?
Retail investor: ...a lot. If I'd just held I'd be up like $15k more on that position.
Me: So you collected $1,400 in premium... & paid $15,000 of upside for it. That's the covered call for you... Works 9 out of 10 times... but the 10th one hurts.
Retail investor: ... I learned the hard way...
Me: You were bullish enough to own the shares... then you sold away the exact move you were bullish on. For pennies.
Don't trade $15k of upside for $1,400 of premium...
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