The Case for Selling Calls in the Current Market

Last Week's Income Report: June 21st, 2022

Selling Calls

In the latest Options Income Weekly, I discuss the recent market sell-off and why we’re making a pivot to selling calls on a number of positions in the current market environment.

 

Last week, the major indices delivered their worst performance since 2020. Stocks were savaged by fears of inflation, recession and higher interest rates, with the S&P 500 falling nearly 6%.

As I’ve been discussing in recent weeks, we’re adjusting our tactics at Options Income Blueprint in light of recent volatility. This has included selling puts that are further out of the money and closing positions earlier to lock in profits. 

Last week, it also involved accepting shares on a number of positions rather than continuing to roll our puts. While I know many option sellers prefer to sell puts, sometimes the math of selling calls is simply much more favorable. Plus, selling covered calls allows us to capture potential appreciation in the underlying shares in addition to generating income. 

In today’s video, I take a closer look at the math behind this decision and the benefits of selling calls in the current market.

The whipsaw trading we’ve been experiencing is likely to continue for the foreseeable future. While volatility will not determine the stocks we trade, it will continue to determine the tactics we use to keep the cash rolling in.

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