Ok, I live in Australia and write covered calls in the US market (Australia is just too small). My intention was to buy some stock and to write covered calls initially to get some confidence in the options market prior to trading options. I have resigned from work (had a baby) and the plan was/is to derive an income using the options market whilst I raise my child (with my husband contributing a steady income).
Last month I had some great success with one of my stocks (and was unfortunately exercised) and made some good cash. The other stock I purchased dropped 35%, needless to say I was not exercised. The problem is that I don't want to write a CC on the stock at the moment because if I am exercised I would have made a significant loss in capital but cannot write a strike price similar to the price I made for the stock because it is just too far away. I learnt from one of my very first CC expriences to watch out for the strike price compared to the stock purchase price when I made a smallish capital loss even taking the income into consideration. To top it all off I am also using margin....
So do any of you more experienced CC writers or traders have any suggestions? If I just sit on the stock and wait for it to increase in value before I write another CC it could be a years time - with no income coming in - hope this makes sense!
Last month I had some great success with one of my stocks (and was unfortunately exercised) and made some good cash. The other stock I purchased dropped 35%, needless to say I was not exercised. The problem is that I don't want to write a CC on the stock at the moment because if I am exercised I would have made a significant loss in capital but cannot write a strike price similar to the price I made for the stock because it is just too far away. I learnt from one of my very first CC expriences to watch out for the strike price compared to the stock purchase price when I made a smallish capital loss even taking the income into consideration. To top it all off I am also using margin....
So do any of you more experienced CC writers or traders have any suggestions? If I just sit on the stock and wait for it to increase in value before I write another CC it could be a years time - with no income coming in - hope this makes sense!