No. of Recommendations: 10
I generally go at the money or only a pinch above, about 3-4 months out. It gives you a whole lot of premium. This isn't the conventional wisdom.
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Any covered calls looking juicy? For June you could write $530s for $13 premium for an exit of $543.
If one were to consider writing calls against one's long position (turning a long position into a covered call position), then yes, I think this would perhaps be an excellent day to consider it.
The choice of strike is pretty personal, and depends on a lot of things like how resistant you are to letting your calls get exercised. (which should be low, if you're thinking of writing calls at all). If I hadn't already in effect written calls against my entire long position, and given how fully valued the stock seems to be at the moment, personally I'd probably be looking at the $520s (bid $19.30), maybe even $515s (bid $21.80).
If those $515s were exercised, you'd be selling at 515+21.80= $536.80. At "normal" valuation multiples you'd expect the price to be in the $420s these days and maybe the $440s in June, give or take? So an exit of over $525 is not objectively a bad thing, if you're willing to sell at all.
The main advantage of higher strikes is that it just reduces the emotional sense of feeling foolish if the price rises a whole lot more: having done something that was perfectly rational, but with hindsight you'd have been better off in this universe had you not done it.
Jim
