(11-05-2021, 02:54 AM)crimsonghost747 Wrote: What happened to you with those two stocks is the reason why I do not sell calls on the div growth part of my portfolio. I got those shares as a long-term investment and obviously the plan is to collect dividends from them for the next several decades, I'm not going to risk getting them called away. No way.The tax issue is an important point that should be mentioned on this thread from time to time. I do this exclusively in my tax advantaged accounts.
I keep my positions separate. A different account definitely helps, especially if taxes are an issue. I still often trade in the same stock since I tend to have a much better feel of the price movements. So for example if I want to trade company X and I already own 150 shares, then I'll either start with selling puts or I'll just buy another 100 shares and sell a single call. Whatever happens, those original 150 shares will stay in my portfolio.
You really have to be comfortable with the outcome if you are exercised. That requires careful choice of strikes.
You will never eliminate the chance of having your shares called away. After doing this thousands of times through up and down markets I can honestly say I go months with very little risk of losing any shares, but in a strong bull market there will be at least a few months per year where a lot of your trades will be troubled for some of the open period or just hopeless from day one. I have a long list of stocks I have sold options on well over ten times with no issue. I have sold options 30 times on VSTO with no exercise. I waited a long time until the stock had doubled and seemingly in a trading range. I own enough shares to stagger the calls. I'll accept the good with the bad when I lose some shares eventually.
I am careful with covered calls on my DGI core positions, and stocks with a strong upside we can't predict. QCOM was just a bad trade. It's not all sunshine and rainbows. I'm not that emotionally attached to my positions. I've lost shares for sure and it will happen again. I won't go broke receiving less profit than I wish I had.
I do recommend range bound dividend stocks for a beginner though. They still make up half my option trades. This strat can take the sting out of yield traps as well. I've made money on T while it drops.
No matter the strategy, somebody can say "well what about if this happens?" I guess my response is "well what if your long port dips 30% and just lays there for years with negative total return?" The stock market will humble most any strategy at some point. That is definitely why I run multiple strategies and they all require discipline. The bottom line on my portfolio is what matters. Is it an acceptable return for the overall risk you are taking?
Was that preachy enough, because I can type some more later. It sucks you lost your QCOM, now rub some dirt on it and get back in the game.
