Covered Calls - Buy to Close - YouTube

Good morning everyone. My name is Stephanie Paul of  Paul's Covered Calls. And I've done the Covid-pivot  

Replacing doggies to dollars. So I'm an amateur  investor and I appreciate your time as I share  

my stories trades and thought processes.  This is me. "Hello, I'm Stephanie.

Recently got a haircut. I've been to the  stylist maybe twice during Covid. And you  

realize it's time to go when Sweet Pea, my dog  (you'll soon meet here) has been to the groomer  

more often than I've been to the stylist.  Covid has affected everyone in varying degrees  

For me covered calls is my go-to money  maker at this time. All right let's get to it!  

This is the all-important board of dog-rectors  This is Sweet Pea and myself  

Also, ironically, we have the same initials. All  right so this discussion is going to be about

buying back covered calls. Buying back  something it means you have to initially sell  

something. You're buying back  something that you have already offered  

"sell to open" and you have a previous  open position. An existing open position

and buying back a cover call for various reasons.  For me nine times out of ten is because I want to  

keep the stock. Again I want to keep the stock  and my strike price happens to be set too low.  

I have a separate presentation upcoming  dealing specifically with some stock that I own  

CLVS and that was a buy back, roll out and roll  up position. And I can actually will show you my  

orders, my filled orders, that represent  that along with a price spike and  

showing you the candlesticks as to why I did what  I did. Here we are you have an existing covered  

call. You decide to buy it back. You  are effectively doing is you are buying to close.

Here is a screenshot. I have CGC. I have an  open position, 3 contracts. Again quiz question?  

I have 3 contracts. How many shares? You've got  this 300 shares. There's a lot of information  

here. Strike price. Right here $27. When does it  expire? Because covered calls always have an  

expiration date. Right here - June 4th. And then this  next slide is you have an open position. How do  

you get it back. You have to go to your chart. You  have to make sure everything is similar to your  

covered call. The date expiration  date and the strike price which is here $27

And again, this is the same screen that you will  use for "selling to open" your covered calls.  

The one exception is right here "buy to close." So again,  it's your drop down menu. You're "buying to close"  

that position. When you "sell to open"  that's when you have money in your account  

When you "buy to close," you're actually paying this  money to buy it back. So I want you to realize  

that covered calls aren't a freebie. You do have to  come to the table with some money. In this case,

you are going to spend some money  to "buy back" your open position.

Same information right here as your covered  call, but this is where it's different.  

I just want to point this out as you have  Bid, Mid and Ask. Sometimes these values are close.  

Sometimes they're not. If you want to "buy  back" - 1, 2, 3 covered calls - you're going  

to be looking in this range. This "Mid" to "Ask"  I have to tell you that whenever I've  

bought back my position, I have never paid the  "Ask" price. I've always entered in something  

in the middle or something on this  side. I just want you to realize,  

you're gonna have to pay some money but you don't  necessarily always need to pay the "Ask" price.

Okay. Similarly, you "sell to open" a covered  call. Same thing here. You "buy to close" right here.  

"Buy to close." Now quiz question? What happened?  Which stock was it? I'm pointing right at it.  

The ticker symbol is NKLA bane of  my existence. But, I've made so much money.  

And unfortunately, I've spent a few hundred  bucks to to buy some of these things (open contracts) back.  

So for me, it was the $18 (covered call) I bought  it back. And I had to spend some money.

I am not perfect. I had too low of a strike  price and NKLA had two consecutive weeks of  

of an (stock) uptick. And I didn't take that into  consideration. So here we are. I had to spend  

a $118 to buy back one  contract. And actually, I'm very pleased that I did  

because i now get to do it all over again. I  get to make a covered call for the following  

week or two weeks of expiration  and eventually make this $$ back

You won't get it right every time. I did not  

get it right. For this week, I bought  it back and I'm gonna start over again.

And I'm going to tell on myself. This  was done on a Thursday. Right here's the date.  

I technically did not need to buy this back because,  if you go and look at stock price, the stock price  

for NKLA ended up closing just around $17. So  technically, I did not need to buy this back.  

But, I'm glad I did because NKLA fluctuates. And so  my thought was if I don't buy it back on Thursday,  

it's going to be $20 on Friday. And even though, it's  approaching expiration, I would probably would have  

paid more to buy back this $18 strike price (on Friday) than i  did on Thursday. That didn't happen! It actually  

ended up closing closer to stock price at $17. Another note, the reason I bought this back  

is over the course of my learning and doing, I have  had some covered calls that have been assigned  

early. That's one reason, yet another reason, why  I wanted to buy this back sooner rather than later.

That concludes the quick video  on how to "buy back" a covered call.  

My reason is mainly because I want to keep this stock.  Please comment. Please subscribe. I appreciate your time.  

More to come. More to share. And a quick disclaimer.  My thoughts are my own. My opinions are my own. And  

my trading processes are my own as well. See you  on the next video. Thanks so much for your time.