Historically, if you wanted to search for high yield covered calls you had to create a spreadsheet and update it manually. It is a slow, tedious way to do research and you're never quite sure if you have really looked everywhere for the best covered calls. Plus, the spreadsheet doesn't update prices during market hours, include ex-dividend dates, or earnings release dates.
Modern software is much more effective than spreadsheets. Purpose-written for one job, it quickly scans the universe of all possible combinations of security, strike price, and expiration date to identify the highest yielding covered calls quickly. And it's a snap to change the search filters to re-run the search a slightly different way. In a matter of minutes you can now do what used to take hours. And the results will be more complete and accurate.
Covered call calculators have made investors' jobs much easier compared to many years ago. The good ones will automatically import price data and make it quick and easy to see the effects of rolling a position. Should you keep what you have or change it to a different expiration date or strike price? With a good calculator you can answer this question in a few seconds, and don't have to go look up data or manually enter anything into a spreadsheet.
One of the key factors in a good covered call calculator is having it know the difference between the bid and the ask prices. It's not sufficient to use last trade prices. Some option series are thinly traded, and some have wide spreads, so using the the last trade price usually results in a high yield calculation that is impossible to obtain in the real world. But if your calculator knows that you have pay the ask when buying back your short option and that you will receive the bid when writing a new long option then you should have accurate yield calculations.
Using a covered call screener to identify high yield covered calls as a starting point for further research is a good idea. You don't want to just blindly invest in whatever high yield opportunity sorts to the top of the list, though. You want to really understand why that option is priced so high. Is there some news about to come out? Did some other company in their space just get bought? Keep researching until you understand the reason for the high yield. Otherwise you may find out the hard way (after you invest there is some adverse news that comes out and causes significant move in the stock not in your favor).
Using a covered call screener to find high yield covered calls, along with a covered call calculator to modify and maintain positions is a good way to increase your odds of success. You'll want to begin your research with a list of candidate trades that will pay a decent amount if they work out. After you are satisfied that you know why the options are priced so high and are willing to take the risk, then using a covered call calculator to optimize the time premium via rolling (if necessary) will help improve your results. Not all high yield opportunities should be invested in, and not all positions should be rolled. But having the right tools will assist you make the right decisions.
Modern software is much more effective than spreadsheets. Purpose-written for one job, it quickly scans the universe of all possible combinations of security, strike price, and expiration date to identify the highest yielding covered calls quickly. And it's a snap to change the search filters to re-run the search a slightly different way. In a matter of minutes you can now do what used to take hours. And the results will be more complete and accurate.
Covered call calculators have made investors' jobs much easier compared to many years ago. The good ones will automatically import price data and make it quick and easy to see the effects of rolling a position. Should you keep what you have or change it to a different expiration date or strike price? With a good calculator you can answer this question in a few seconds, and don't have to go look up data or manually enter anything into a spreadsheet.
One of the key factors in a good covered call calculator is having it know the difference between the bid and the ask prices. It's not sufficient to use last trade prices. Some option series are thinly traded, and some have wide spreads, so using the the last trade price usually results in a high yield calculation that is impossible to obtain in the real world. But if your calculator knows that you have pay the ask when buying back your short option and that you will receive the bid when writing a new long option then you should have accurate yield calculations.
Using a covered call screener to identify high yield covered calls as a starting point for further research is a good idea. You don't want to just blindly invest in whatever high yield opportunity sorts to the top of the list, though. You want to really understand why that option is priced so high. Is there some news about to come out? Did some other company in their space just get bought? Keep researching until you understand the reason for the high yield. Otherwise you may find out the hard way (after you invest there is some adverse news that comes out and causes significant move in the stock not in your favor).
Using a covered call screener to find high yield covered calls, along with a covered call calculator to modify and maintain positions is a good way to increase your odds of success. You'll want to begin your research with a list of candidate trades that will pay a decent amount if they work out. After you are satisfied that you know why the options are priced so high and are willing to take the risk, then using a covered call calculator to optimize the time premium via rolling (if necessary) will help improve your results. Not all high yield opportunities should be invested in, and not all positions should be rolled. But having the right tools will assist you make the right decisions.
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