Option premiums were higher than normal due to uncertainty surrounding legal issues and a recent earnings announcement. You would want to sell deep-in-the-money covered calls when you think the stock price will go down. Another reason could be as part of a hedging strategy. Do I need to check for stock news if the return is above 4% but also below the 6% maximum ATM strike return, or only if it is above 6%? Options trading can be a great way to make money, but it is important to understand the risks involved. All things being 100% equal between 2 stocks, I would favor the $1 strikes. Deep in-the-money covered calls are covered call options where the strike price is significantly lower than the current market price of the underlying asset. Options basics: Deep-in-the-money options | Nasdaq Spirit Funds LLC, DBA NetPicks Deep Out-of-the-Money (OTM) options are those with strike prices that are far away from the current market price of the underlying asset. CLICK ON IMAGE TO ENLARGE AND USE THE BACK ARROW TO RETURN TO BLOG. Each type has its own advantages and disadvantages so choose wisely depending on what works best for your individual goals. Is it better to sell options in the money? I have a question for you. This means that the call option has a high intrinsic value and low time value. Some of the shares of around the same value I see have different strike price gap differences, and wondered why this could be?, is a larger gap difference best to avoid when selecting a stock? Thanks for clarifying that question. A deep OTM option contract is a financial instrument that traders can use to wager that a security's price will be far different from its current price at some point in the future. This was the case with our Rambus example. OTM calls have a strike price higher than the current market price. But are you trying to time your selling after a break below the lowest low of the recent price support level or maybe below the price close low point?, should this type of chart be in candle/bar prices or close prices? Why would someone sell deep in the money calls? I believe Alcoa will bounce upward and downward as the price of aluminum, supply and demand affect the stock positive or negative.
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