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I've always been interested in implementing options strategies. the ones of particular interest are put selling for positions I want to own longer term and the common covered calls. Unfortunately I never find the time to actively pursue this but will periodically go back and read the options threads and some articles I find online. Aside from noting bullish sentiment what other information should one be taking from this post?
 

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Implied volatility is probably the most important measure that tells how cheap or expensive an option is. The VIX reflect implied volatility on the S&P 500 index for the next month.

Within stocks, volatility spikes when the price falls. Sometimes pending news or earning report also cause an increase in volatility.

Many option sellers sell when volatility is high if they assess that volatility will contract in the future.
 

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The week of Feb 14 2020 when the DJI made its all time high small trader call buying set an all time record high 7.5 million contracts according to sentiment trader.com. Last week small trader call buying hit 12.1 million contracts. Small trader call buying is 10 contracts or less. With the little guys buying so many calls when they usually get it wrong when they are all on one side of the market is a warning along with the low put call ratio & DSI numbers.
 

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I am not sure this is the right thread for this but it is the closest i could find. During this time of heightened volatility i have been selling covered calls. This is not a difficult thing to do, so i am far from claiming much knowledge in this field. But I do know that i can sell covered calls successfully. And when the market changes, i know how to sell puts, in order to buy stocks i want to own at a cheaper price.

Beyond that i don't know too much. Right now i would like to hold onto a stock (TD) that i sold a covered call on. It is already above the strike price and the date is june 19.

Here is where it gets cloudy for me. I have tried reading on the subject and i believe i have understood that in order to keep the stock and preventit from being called away, the procedure is that in the last week youthe call back through a buy to close order.

Now, what is not clear is whether i can actually buy the call back before june 19. Since i have sold that call isn't it possible for someone to exercise their option and call it away right up until the last minute.

And if i am able to buy it cack, do i buy it at the strike price or at the price this stock is currently trading at?

Any enlightenment would be greatly appreciated
Thanks G
 

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Can you please explain in plain English for those are not knowledgeable about the technical jargon?
1. When you buy calls, you are banking on stocks or a stock going up. Opposite when buying puts.
2. Somebody noticed that then the majority were buying calls the market would go down so the put/call ratio was devised - divide the number of puts purchased by the number of calls gives you the ratio.
3. With the markets weakening today, it would appear that the low ratio anticipated correctly.
4. this is an indicator for traders. Long term holders, and people who buy etf and other types of funds generally ignore it. Besides you have to pay for the information by having a financial paper subscription that contains this information. A readily available indicator that probably correlates fair well with it is the RSI which you can get on yahoo charts.
 

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I am not sure this is the right thread for this but it is the closest i could find. During this time of heightened volatility i have been selling covered calls. This is not a difficult thing to do, so i am far from claiming much knowledge in this field. But I do know that i can sell covered calls successfully. And when the market changes, i know how to sell puts, in order to buy stocks i want to own at a cheaper price.

Beyond that i don't know too much. Right now i would like to hold onto a stock (TD) that i sold a covered call on. It is already above the strike price and the date is june 19.

Here is where it gets cloudy for me. I have tried reading on the subject and i believe i have understood that in order to keep the stock and preventit from being called away, the procedure is that in the last week youthe call back through a buy to close order.

Now, what is not clear is whether i can actually buy the call back before june 19. Since i have sold that call isn't it possible for someone to exercise their option and call it away right up until the last minute.

....

Any enlightenment would be greatly appreciated
Thanks G
Your in-the-money call is not likely to be exercised, as long as it has time value in it. Anyone who is long that call would be better off selling the call than exercising. Having said that some people do strange things and you could get an assignment. If there is little time value left, or if the stock is going ex-dividend in the near future, then the chances of assignment are much higher. In that case your stock will be called away at the strike price (you have to sell at the stock price) and you may have to buy it back at a higher price.

And if i am able to buy it [back], do i buy it at the strike price or at the price this stock is currently trading at?
You would want to buy back the call (and not the stock) at the current market price (for the option). You could close the call and take a loss or you could roll up and out, meaning that at the same time you buy back the call that you are short, you would sell another covered call with expiration out a couple of months and a strike that is higher than your current strike. If you do this as a credit, at some point in the future you could break even or make a small profit, instead of taking the loss.

You could wait a few days to see if the current volatility takes your call out of the money, with a chance to break even or even let it expire at a profit. If not you could let the stock get called away and replace it with another prospect.
 
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