So I have been selling options on GLD and SLV for last 2 months, but the problem is they always get called out as GLD and SLV went above my wildest dreams. Assuming this trend to continue, how can I make cash, while protecting and keeping to hold underlying assets?
Would greatly appreciate people guiding me on how to keep making some extra cash and keep preserving underlying stocks
Posted by Partth93
8 Comments
Trade with the trend, not against it
Assume you’re talking about covered calls. Stop selling them for the time being. Sell puts instead.
Covered call selling is only for sideways or slightly bullish markets. Not in a raging bull market and definitely not in a bear market. Eventually , you will be holding a BAG for a very very long time…
Selling puts might be the play here. You are getting premium, and if you are bullish on both, then you are probably okay to buy them at the lower price (in case you get assigned)
It really depends on what you’re doing. Are you selling calls or puts? And what’s your actual goal here. If you’re bullish and want to keep holding, covered calls in a strong up move will keep getting called away. If you’re ok owning more, selling puts usually makes more sense.
For me, I’ve mostly been selling puts. I just don’t think SLV (and even PPLT) are in bubble territory yet 😄 USD keeps getting weaker, that’s basically my thesis.
Honestly I’ve been making more on those than IBIT and ETHA options lately. Crypto’s pumping again though, so puts there might be easy wins too. Just comes down to what you’re comfortable holding if you get assigned.
Buy a 3 month out put a few strikes less than the current price. Then sell a next week, barely OTM put before the market closes on Friday. In an up trend you will collect the premium each week with your risk defined by the difference between the bought and sold strikes. Good luck.
Ideal play here is to keep your GLD and SLV stocks (assuming you own any) safely on the side, and just write spreads.
For stocks steadily climbing you can usually easily write $5 put credit spreads a few spaces below market, ~45 DTE, free cash. If the stock is going up fast enough close them in a few weeks to lock in and reopen.
But, if stocks are flying up, I really prefer a call debit spread instead. These are great because you pay up front, the stock flies past your top marker and you close immediately for a nice profit.
Now if stocks are going up $25-50 every six months it’s worth it to just open a year-long long call deep in the money (~78-80 delta). These will be expensive but even 1-2 contracts can net a nice profit when sold.
TLDR: leave your assets alone, open long calls and sell when you can net a decent profit, and in the meantime leverage by writing call debit spreads (especially right after a mini dip to support floor), or if feeling less aggressive, put credit spreads.
Sell cash secured puts?