Covered Calls
topic on 1 show · 5 statements across 2 episodes
5 statements about Covered Calls, every show
Saguaro Capital Management writes covered calls as part of its strategy
“So definitely my first window, and it's funny that we actually write cover calls now.”
Selvala: Covered calls generate yield when valuations are high and upside is muted
“One is a manager that uses covered calls, and even though, sort of to our earlier point, even if volatility isn't high, stock prices are high, and so adding some yield on top when the risk of a continued run is more muted and the potential of more of a decline…”
Selvala: One-to-three-month expiries are optimal for covered call decay
“The time decay doesn't really kick in until three months and in, and so that doesn't make a lot of sense. You know, and markets can move and change so much in a year. So I personally think sort of that one to three month window, you know, is really the optimal”
Selvala: Selling 25-delta covered calls realistically adds 2-3% in portfolio yield
“Generally speaking, you know, I think you can adding two to three percent, sort of doubling the yield is, is a reasonable expectation. If you're trying to do more than that, either you're selling calls on a really volatile stock, which in effect is giving you …”