馃攳
Charles Schwab | How To Trade Covered Call Options On Dividend Portfolio For Easy Income - YouTube
Channel: Hidden Freedom
[4]
everybody dave here in freedom investing
[6]
and today we're going to go through
[7]
how i make an options trade against my
[10]
dividend portfolio so covered calls is
[12]
what we're going to be doing today
[14]
i am going to be doing some
[18]
live trades it is during the market
[20]
hours right now and there's a couple
[21]
positions that flashed up
[23]
and we're going to go ahead and make
[24]
those uh those trades so
[28]
i don't normally get to make a video
[29]
during market hours so
[31]
i'm excited to do that today so we are
[34]
looking at my dividend portfolio here
[36]
and i've done
[37]
many of videos my dividend portfolio
[39]
updates and all that but i haven't
[41]
really done any covered calls against
[43]
any positions in here yet
[44]
until last week and uh
[48]
we're going to put some live trades on
[50]
today so new positions flashed and i'm
[53]
going to kind of go through
[54]
the you know the process that i go
[57]
through when i make the trade
[58]
what i look at and all that so let's go
[62]
ahead and look at the dividend portfolio
[64]
here and see
[65]
what is flashing uh for the trades today
[69]
so what we're looking at here is
[72]
we're looking at realty income and that
[74]
one's got 100 shares
[76]
and it's flashing green so i set a
[78]
conditional there
[79]
and the conditional looks at whether or
[82]
not the position
[83]
is over 100 shares and it also looks at
[86]
the unrealized
[87]
gain loss percentage here and so that
[90]
one is
[91]
pretty much flat in that account these
[93]
are two different accounts here by the
[95]
way schwab taxable schwab
[97]
tax deferred so that's the reason why
[100]
that is flashing green
[101]
conditional looks at this particular
[103]
column here
[105]
and it also looks at this column here
[107]
make sure we have a hundred shares
[109]
and this column here i'm making sure i'm
[111]
over negative one
[112]
percent okay because anything you know
[115]
anywhere around negative one percent i
[117]
can pretty much make some money on it
[120]
so it doesn't necessarily have to be
[121]
exactly green it can be
[123]
green or minus one percent or anywhere
[125]
in between and it will flash green here
[128]
so that particular option
[131]
or that particular position there on
[134]
realty income i've already made a trade
[136]
on that one
[136]
so if you look at my options history
[139]
here
[140]
i put that on just a couple of days ago
[142]
so
[144]
um open date was 6 18 so that was last
[146]
week so
[148]
i'm not going to be making a trade on
[149]
that one today or on verizon so let's go
[151]
back to the dividend portfolio here
[154]
and there's the verizon one that's
[156]
flashing green for us
[157]
but uh i noticed a couple of new ones
[159]
today so let's go ahead and take a look
[161]
let's
[161]
scroll up here and so coca-cola is
[165]
flashing green on us we have 100 shares
[168]
and we also have let's see here
[172]
inward you know within that minus one
[174]
percent to zero
[175]
so that's the reason why that was when
[177]
flashing green
[178]
and let's go and scroll up here and it
[181]
looks like we have a legged implant as
[183]
well that's 100 shares
[185]
above and we're all you know almost
[187]
eight percent up in that particular
[188]
position
[189]
so let's go ahead and make some options
[192]
trade in schwab on leg
[195]
and coca-cola so the first thing that
[197]
we're going to look at
[198]
is we're going to look at the uh
[202]
chart here we'll look at leg so we're
[204]
looking at leg here and we kind of want
[206]
to figure out where
[208]
the strike is going to be and where i
[210]
feel it's gonna be you know
[212]
safe and all that so um what i'm gonna
[214]
be looking for on leg is probably around
[216]
the 40 strike price and that's right
[218]
around that 200 period moving average so
[220]
i feel like there'll be a sticking point
[222]
even if it gets up there it's going to
[223]
hang around there for a while so i feel
[225]
like that's a pretty good
[226]
upside um if we can make money on it so
[229]
we'll look at the options here in a
[230]
second so
[232]
let's go ahead and look at coca-cola
[234]
while we're here
[236]
and coca-cola we are okay so coca-cola
[241]
um ideally i want to be around this 200
[243]
period moving average if i can which
[245]
would probably be about
[246]
51 or so um but
[250]
uh i feel like 50 would be a decent
[252]
strike as well
[254]
so we're going to kind of look at the 50
[256]
to 51
[257]
on coca-cola and the next thing in the
[260]
process that we're going to do
[262]
is we're going to pull up thinkorswim
[264]
platform
[267]
and from the thinkorswim platform we're
[269]
going to go ahead and look at the
[270]
options here
[272]
and we're going to go out to let's say
[274]
24 days or so
[276]
24 days to dte so that stays to
[280]
expiration
[281]
we're on coca-cola and we're going to
[284]
kind of scroll down
[285]
and we're looking about the 50s right so
[287]
the 50s
[290]
and that's about a 9 of probability of
[292]
being in the money
[294]
so and you know fortunately it's only
[296]
about 14 to 15
[299]
so i feel like going down to the 4950s
[302]
might be a better that's about a 12
[304]
probability being in the money at this
[305]
24 dte
[307]
um and we get about uh about 20 bucks
[310]
out of it so that's pretty good
[312]
um you know even if it goes up above
[314]
there you know we're not gonna
[316]
you know miss too much upside because i
[318]
feel like that 50 is kind of a sticking
[320]
point so
[322]
um i feel like that 20 to 20 dollar or
[325]
it's about 19 cents
[327]
to 20 cents which would be about 20
[328]
bucks is a good point so we'll go ahead
[330]
and probably
[331]
execute a trade on that one so let's go
[333]
ahead and look at the leg while we're in
[334]
here
[336]
and see leg so we're gonna go out to
[338]
about 24 days
[340]
of uh days of expiration so
[344]
uh i don't like to go out too far but i
[346]
don't you know
[347]
i'm trying to make money too right these
[348]
are covered calls we're not going to be
[350]
doing
[351]
anything super risky here so
[354]
you know the goal is not to have our
[356]
positions called away but that's okay if
[358]
they are as well we just don't want to
[360]
miss a lot of upside so
[363]
and we're going to be looking at what
[364]
the 40 on that one so
[367]
if i remember correctly let's go and
[368]
take a look because i can't remember
[370]
apparently so
[371]
leg yes 40 is where we want to be on
[375]
that one so
[376]
looking at the 40 strike here and we're
[379]
looking at the calls
[381]
and let's see here 13 chance of
[384]
probability of being in the money
[385]
that's where we want to be and that's
[388]
about we could probably make about 35
[390]
on that one over that 24 day period and
[393]
you got
[394]
holidays and weekends thrown in there
[395]
and all that and that don't really count
[397]
so
[398]
it counts i mean it bleeds off but
[401]
you know those are days that we don't
[402]
have to worry about the stock going up
[404]
right so
[404]
and today is a good day to sell against
[407]
the leg as well because i believe
[409]
it is up three and a half percent so we
[411]
want to sell on those up days if we can
[413]
because
[414]
the premium is worth more so i don't
[416]
think coca-cola
[417]
is up very much today yeah it's up half
[420]
a percent so
[421]
we'll still sell one against coca-cola
[423]
as well so let's go ahead and make the
[424]
trades
[425]
uh in our schwab account if you're
[427]
enjoying my content go ahead and like
[429]
and subscribe and hit that bell
[430]
notification
[433]
okay we are logged into schwab now we're
[435]
gonna go ahead and make a couple of
[436]
orders
[437]
or a couple of trades so let's go ahead
[439]
right now i'm just on the all-in-one
[440]
ticket which will work
[442]
you can do the options up here um and
[445]
bring up the options chains and all that
[446]
but we're gonna just do the all-in-one
[448]
order ticket here so we're going to go
[450]
ahead and type in leg
[452]
and bring up the leg here and we're
[454]
going to do
[455]
strategy and we're going to do
[458]
a call because we're doing covered calls
[462]
and so there we got the quotes and all
[465]
that so what we're going to do now is
[466]
we're going to go down here
[468]
and find the expiration date we want to
[470]
do
[471]
717 which is already selected and
[474]
for leg what was the price that we
[477]
wanted
[478]
on legs so i always forget and i
[481]
should have wrote this down so we want
[482]
40 ish for legs so
[485]
let's go ahead and find the 40 strike
[488]
price which is already there
[490]
we're gonna do a call and we're going to
[493]
go ahead and do
[494]
sell to open okay because we're doing a
[496]
covered call here
[498]
so we got leg we got 7 17 is expiration
[501]
date
[501]
40 strike call cell to open we're going
[504]
to do one because we have 100 shares
[506]
and our mid price is 35 cents
[510]
okay so we'll just click that because
[511]
that's what we ought to want we want to
[513]
try to split that bid and ask if we can
[515]
so limit order i'm just gonna do a
[518]
market order
[519]
okay day only is fine and
[522]
it's funny is it changed it uh to 30
[525]
on the market order so looks like we
[528]
might not be able to do a market order
[529]
at 35 so let's go ahead and see if we
[531]
can
[532]
make that order fill and
[536]
uh fill up 35 so place order here
[540]
there is our order there so it did fill
[542]
it filled up 35 cents which is 35
[545]
so that's interesting i thought you
[546]
could do a market order
[548]
and or of course the market order makes
[550]
sense because it's going to just grab
[552]
the bid price
[553]
so that does make sense if i'm trying to
[555]
split the difference there you got to do
[556]
a limit order so
[558]
um and that makes sense that's the first
[561]
time i've
[562]
tried that on schwab's platform so that
[564]
one did fill let's go ahead and do the
[565]
next order and that one's on coca-cola
[568]
so let's go ahead and go to the
[570]
all-in-one ticket and bring up coca-cola
[573]
let's go to the options here and see we
[576]
want to do call
[578]
and what was the price we wanted on that
[580]
one the price was
[582]
coca-cola i think we looked i think
[584]
we're going to settle on 49.50
[586]
so we'll look at the 50s real quick to
[588]
see what the price is but probably end
[590]
up settling on 49.50 so
[593]
and it's the expiration date we want to
[596]
do 717
[599]
and let's see here strike price is
[603]
49 let's try 50 first
[607]
50 and it's just not a lot of money
[609]
there with the 50 strikes so let's go
[612]
ahead and see what the 4950s are worth
[614]
and that's a little bit better it's
[617]
about uh
[617]
20 cents 19 cents 20 cents so let's do
[620]
it to sell to open
[622]
one contract we have 100 shares we're
[624]
gonna do one contract all right we'll do
[626]
a limit and let's do mid price here
[630]
and let's go ahead and do let's just
[633]
make sure everything right
[634]
coca-cola 717 expiration date 49.50
[638]
strike
[639]
call sell to open and then 19
[642]
let's go ahead and review order
[646]
and let's go ahead and submit this order
[648]
so
[649]
place order and it's good or
[653]
status there we go and it filled 19
[656]
so we made our orders or we made our
[658]
successful trades today
[660]
on lake and coca-cola for our covered
[663]
calls the next thing to do is just
[664]
fill in our options here uh our options
[669]
income here and so let's go ahead and do
[672]
that
[676]
[Music]
[680]
okay looks like we're done there this is
[683]
kind of a work in progress i probably
[685]
need to automate some of this stuff but
[688]
some of this stuff is grabbing from
[690]
google finance
[691]
automatically like current stock price
[693]
and all that but
[694]
in general um it's getting what i need
[697]
to have done
[698]
so let's go ahead and just you know go
[700]
ahead and fill in that uh there we go
[702]
uh so we put in coca-cola put in lag
[705]
and days to expiration is 24. uh
[709]
i just kind of put the stock price in
[710]
there just to give me an idea of when i
[713]
actually opened up the trade
[715]
and it's normally obviously pretty close
[717]
to the stock trade price
[718]
and break even price there is usually
[721]
just the strike minus whatever the
[723]
commission
[724]
and uh premium is a percent from
[727]
in the money that's you know real time
[731]
now i must have you know so coca-cola is
[733]
wrong so let's change the strike price
[735]
to 49.50
[737]
that's better so what this is looking at
[739]
here percent from in the money is that's
[741]
just looking at the current price versus
[743]
my strike price there so
[744]
the stock needs to go up seven percent
[747]
that's coca-cola there
[748]
needs to go up seven percent to be in
[750]
the money so leg
[752]
needs to go up 12 to be in the money
[754]
okay
[755]
and then right now all these expire
[758]
right around
[759]
uh they all expire in july so either
[762]
second or third week
[763]
and 127 dollars of income we're going to
[766]
make from those covered calls
[768]
for the month of july so as these
[769]
positions you know get up to be built up
[771]
to be 100 shares in each position
[774]
and you know they're within that one
[776]
percent or minus one
[778]
percent to or above i should say i'll go
[781]
ahead and
[781]
start selling more covered calls you
[783]
know i do have other positions in here
[784]
that are more than 100 shares like
[786]
there's you know wells fargo but it's
[788]
down 12
[789]
so really can't make any money on that
[790]
unless i go way out in time which i'm
[792]
not willing to do
[793]
so here's another one here there's
[795]
pfizer there that one's you know 105
[797]
shares
[798]
but it's still down eight percent so
[800]
that's not really a candidate
[802]
so you know there's some other ones
[803]
there's att there but it's down 11
[806]
so uh as more positions get built up
[809]
we will be selling some more covered
[811]
calls in the future
[813]
and for right now um we just have these
[816]
four
[816]
on and you know um anyways
[820]
that's it in this video if you have any
[822]
questions comments concerns go ahead and
[823]
leave a comment below
[825]
go ahead and like and subscribe and
[826]
we'll see in the next video
Most Recent Videos:
You can go back to the homepage right here: Homepage