I was just thinking that since I am a swing trader.... Wouldn't it be a good strategy to do covered calls? e.g. I want to hold stock X. For two weeks. Price $100. I will not sell it until the price is $120. I can sell a call option 2 weeks Strike price $120. Isn't this strategy better than just buying and holding the stock?
If price moves south you have a risk. There may also be dividend risks. It is an option used in long term buy and hold to collect rent.
stocks/ETF with dividends likely have less option premium. an example only for reference & information purposes only. lets take a wild card pick NCLH at $12.50 last. Buy the stock sell a DITM covered call at $5 strike price expiring Jan 2021, pays $8.80 last Friday 17 April https://www.barchart.com/stocks/quotes/NCLH/options?moneyness=allRows&expiration=2021-01-15 $5 + $8.80 = $13.8 - $12.50 = $1.3/$12.50 = approx 10.4% with downside protection to ($5-$1.30) = $3.70 10.4% for 9 mth trade is ~13.86% annualized. or what about a Jan 2021 expiry vertical call spread 5/10 cost $2.43 max loss. $5 spread - $2.43 cost = $2.57 potential profit on an investment of $2.43 = 105.7%
if you buy a dividend stock & option ATM or ITM, your option is exercised before ex-dividend date ... no dividend
Why not sell a put if you are certain that it will move up? An option is more valueable the closer it is to the strike price
good point. especially on the NCLH mentioned above on the premise the stock will go back up OP an example again Jan 2021 expiry the $5 put will pay you $1.60 option money last https://www.barchart.com/stocks/quotes/NCLH/options?moneyness=allRows&expiration=2021-01-15 potential loss to zero $5 - $1.60 = $3.40