ASX Shares Covered Calls

Aaron T · 2nd Jan, 2021

Aaron T said: ↑

Attached is one I prepared earlier as an example.
A 90 day credit spread for a credit of $730ish 2% out of the money. You only need $1000 capital to cover this as you’re both buying the short and selling the long at a 1 point spread. The most you can lose is $270 if you let it expire inside the money. For this to be profitable the strike price either needs to stay the same or move up. Time decay is very powerful in this position.

It looks complicated but it’s a one touch trade with my brokerage app.
I hope this helps you guys, it’s been a winner for me long term.
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Sorry, it’s 270$ capital as the credit is automatically applied to your account at the transaction.

Comrade 1984 · 2nd Jan, 2021

Thanks Alan & Kermut. Yes, it's pretty hard for foreigners to trade US stock options. I went as far as visited the USA but everyone turned me down as I lack a SSN.

Andy1963 · 21st Mar, 2022

Comrade 1984 said: ↑

Thanks Alan & Kermut. Yes, it's pretty hard for foreigners to trade US stock options. I went as far as visited the USA but everyone turned me down as I lack a SSN.
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IBKR can help you. I was in the same situation but I opened an account with them quite easily. Can trade almost anywhere, including US.

mehrar_84 · 21st Mar, 2022

Aaron T said: ↑

I trade options occasionally with a US account I’ve had for years. I think I’ve tried about a dozen different strategies over the years and at one point became a little obsessed. I used it as my main source of income for a few years and was rather successful (/lucky). Apologies as this doesn’t apply to Aus markets but the moral of the story is the same. I’m no financial analyst, just a regular schmo who did some research and took a punt with a margin account. I’m not versed in technical language or have any formal education in finance.

Selling put spreads worked a treat when tech stocks were booming 2016-2019 but a few black swans left me with my pants down on occasions. Iron condors where great when things were flat in previous years and a mish mash of others thrown in have worked at times.

After all the research and multi monitor graph tracking analysis pseudo science, my one and only strategy now is rather simple and generates on average 12-16% on my leveraged account. Cash on cash this is a nice earner. This on top selling monthly calls on my holdings wayyyyyyy out of the money are the only options I touch.

I sell an index fund put spread (s&p or q’s) 10% out of the money with a 90 day expiry for a decent premium then buy it back rain hail or shine after 40-60 days depending on sentiment. I do this every Monday without fail. Sometimes I pay more than I sold for but more often than not I profit. Time decay plus the intrinsic movement upwards has made this my most successful strategy over ten years. Granted my US account has zero fees, cheap interest and the volume and volatility of their markets make this a bit easier.

In short, the more complicated I got and the more I ‘could pick’ the direction of the market the less I made.

I read somewhere warren buffet makes most of his profits from selling naked puts in WTI (oil).

There are some really good beginners books that cover the basics, I’d start there. Once you get the concepts- the world is your craps table.
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Hi Aaron, Which platform you use to trade US stock options from Australia?

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ASX Shares Covered Calls

Aaron T Member

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mehrar_84 Well-Known Member

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ASX Shares Covered Calls

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