Don't Make the Dumb Money Trade on Intel, Sirius XM: Opinion
Before you know it, things like implied volatility and time decay have an impact and your once "cheap" OTM call is now worthless. You have no idea what hit you. That's because you (A) received bad or far-too-ambitious information and (B) you had no business being in a trade -- fueled by emotion -- that you did not understand. The result, you rationalize what happened and make more bad trades, or you cast off options all together and move on.
It should not, and doesn't have to, be that way. If you get into the proper trades in the first place, things stand a much better chance of going well for you. For beginners and beyond, the best options trade is the one with the fewest things to have to think about.
Let's consider INTC first. I do not have a large position in the stock. I just bought it and plan to scale into a position over the course of the year. I only have enough shares to write one covered call against. You might think that I should just move on from the idea of using options in conjunction with 100 shares of my INTC position.
As the screenshot from my account shows, I am in the beginning stages of my covered call strategy and INTC position.
I collected 22 cents in early April on an INTC April $29 call that ended up expiring worthless. Today, I sold an INTC May $28 call and took in 25 cents. Before commissions, that's 47 cents, or $47 worth of income. After the relatively steep commissions I pay at this brokerage, I "only" generated $29.60. (As an aside, I have several brokerage accounts. This one has the highest options trade commissions. I take that hit because it's much less expensive to scale into a position in relatively small increments in this account than it is in my others. This works for me).
Assuming my shares never get called away, I plan to sell an INTC call a minimum of five more times this year. If I net $14.80 each time, I take in $103.60 worth of covered call income on 100 shares of INTC that the person who never wrote the covered calls left on the table. Sure, I share that income with my brokerage, but I have essentially set up a situation where Intel pays me -- indirectly -- another dividend.