Best day of the Week to Sell Covered Calls
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Covered calls are a great way to generate income from your stock portfolio, but what is the best day of the week to sell them?
Does it matter?
There are so many things to think about when thinking about the Best day of the Week to Sell Covered Calls.
There are a few things to consider when determine the best day to sell your covered calls. The first is the expiration date…..but first for those that don’t know, let me clarify what I mean by a covered call.
A covered call is an option strategy in which you sell someone else the right to buy your stock at a price agreed upon in advance.
You can write, short, or sell any kind of covered call — it’s all the same thing. On most stocks, you may only sell a covered call; on some stocks, you can only buy one.
Otherwise, the option wouldn’t be protected – it would be naked.
Covered call sellers make money two ways: first, if the stock price doesn’t change or goes down, and second through the option premium.
If you choose to write a covered call with a longer timeframe, you will obviously collect more premiums, but there is more risk that the stock price will increase and the option will be exercised.
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Best day of the Week to Sell Covered Calls: Factors
Time to expiration?
Probably 30-45 days ahead is a good place to start, but use your judgment. You should seek for a date that offers you an acceptable price for selling the call option at your chosen strike price.
Some investors believe 2% of stock value is a reasonable premium to seek.
Is it better to sell weekly covered calls or monthly?
This is a matter of preference, but I prefer monthly.
Because there’s more time value in monthly covered calls, the premium received for monthly covered calls is always greater than that received for weekly covered calls.
There’s a larger safety cushion with monthly covered calls since the premium may compensate for more of the fall if the underlying stock moves against you.
I like the extra income and it also allows me to keep my capital invested for a longer period of time.
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What is the best day of the week to sell covered calls?
The best day of the week to sell your covered calls would be on a Monday.
This is because most people are back at work after the weekend and they have time to look at their portfolios and make decisions.
The weekends are usually when people catch up on their personal lives and don’t have time to focus on their investments.
Mondays also tend to be less volatile than other days of the week, so there is less risk that the stock price will change dramatically and the option will be exercised.
Tuesdays and Wednesdays are also good days to sell covered calls, but Thursdays and Fridays tend to be more volatile.
If you are going to sell a covered call with a longer time-frame, then it is best to do it on a Monday so that there is less time for the stock price to change and the option to be exercised.
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When is the best time to do a covered call?
The best time to do a covered call is when the market is in an uptrend and you are bullish on the stock.
You should also consider the implied volatility of the options.
If the options are overpriced, you may not get as much premium for selling the call option.
You can use a tool like PowerX Optimizer to find stocks that are in an uptrend and have the correct Delta and high implied volatility.
What is The PowerX Optimizer?
The PowerX Optimizer is a premium tool that allows you to find the best stocks for covered calls. You can read my full review of PowerX Optimizer here.
It takes into account the trend of the stock, the implied volatility of the options, and the Delta of the options.
The PowerX Optimizer is a great tool to use if you want to generate income from your stock portfolio.
What is a good covered call strategy?
A good covered call strategy is to sell out-of-the-money covered calls.
This means that you would choose a strike price for the call option that is above the current price of the stock.
By selling out-of-the-money covered calls, you are reducing your risk since the stock would have to move higher for the call option to be in-the-money at expiration.
You are also more likely to generate income as you will receive a higher premium for selling the call option.
To find out-of-the-money covered calls, you can use a tool like PowerX Optimizer.
What is the best stock for covered calls?
The best stock for covered calls depends on a few factors.
You should consider the trend of the stock, the implied volatility of the options, and the Delta of the options.
You can use a tool like PowerX Optimizer to find stocks that are in an uptrend and have the correct Delta and high implied volatility.
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What is the best covered call screener?
The PowerX Optimizer is the best covered call screener that I have found.
It takes into account the trend of the stock, the implied volatility of the options, and the Delta of the options.
Why you should not sell covered call options?
There are a few reasons why you should not sell covered call options.
The first reason is that you are giving up the upside potential of the stock.
If the stock price goes up, you will only make the premium from selling the call option.
The second reason is that you are taking on additional risk by selling the call option.
If the stock price falls, you could lose money on the trade.
The third reason is that you may not generate as much income as you would like.
This is because you are giving up the upside potential of the stock by selling the call option.
Covered call writing is a great way to generate income from your stock portfolio, but you should be aware of the risks before you start selling call options.
Does theta decay on weekends?
Theta decay is important to consider when selling options as we count on it to make money.
Theta decay is the rate at which the value of an option declines over time.
It is affected by a number of factors, including time to expiration, implied volatility, and interest rates.
Theta decay accelerates as we get closer to expiration.
It is also greater for options with higher implied volatility.
Theta decay does not occur on weekends, as the markets are closed.
This is why it is important to consider theta decay when selling options.
You can use a tool like PowerX Optimizer to find stocks that have high implied volatility and are close to expiration.
This will help you maximize your profits from selling options.
So now the question is, will taking Saturday and Sunday away from the week affect theta decay?
The answer is no.
Because Monday is a day later than Friday, decay occurs as if it were the next day of Friday. Because of the weekend effect, there won’t be much decay on Monday.
However, theta still slightly decays on weekends.
It is just not as significant as during the weekdays.
Theta is more significant on weekdays because there are more days for the options to decay.
On weekends, there are only two days for the options to decay.
This is why theta is more significant on weekdays than on weekends.
Best day of the Week to Sell Covered Calls? Conclusions
It really doesn’t matter what day you sell covered calls on. Maybe Monday? Maybe not….?
The important thing is to focus on stocks that have high implied volatility and are close to expiration.
You can use a tool like PowerX Optimizer to find stocks that fit these criteria.
Once you have found a stock, you can sell the covered call on any day of the week.
Russell
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