Many investors use covered calls as a means to generate income. The increased availability of weekly and continuous weekly options has put these income techniques for covered calls, naked puts, and credit spreads, on steroids. There are now 530+ stocks with weekly options and most of those are available with 'continuous weekly options', which means they have options expiring in each of the next 7 weeks.
Trading weekly options takes some special tactics. Because of the shorter time periods of the trade, both the net credit and the short-term return are smaller. However, the annualized returns and transaction activity are higher. Therefore, it is important to have low transaction costs with your broker to make trading every week more efficient.
Another tactic is to trade higher priced stocks because the fixed cost of the transaction fees will generally be a smaller percent of the net credit you receive. It is also advantageous to target stocks with higher volatility, which increases the premium values and, therefore, higher net credits. Examples of the kind of stocks that meet these criteria are:
There are other factors that are important if you have to buy the stock (covered call) or get assigned the stock (naked put). Then it is desirable to have the fundamentals of the company to be worthy of a long term hold. You may want the company to have growing sales, earnings, good stock liquidity, and moving up in stock price. The pre-set parameters in PowerOptions already have many of these criteria established when using the "Weekly Covered Call Search". In just seconds the entire market is screened using 2 clicks and a list of candidates will be displayed:
If you are not already signed into the site... Log on to PowerOptions
Click the Covered Call tab
Click Search Here's what you'll see...
As you can see from this search report, there are many opportunities to get 2-3% returns in only 9 days using weekly's for your covered calls.
Invariably someone will ask, "But the stock I am interested in did not appear". Generally it is because that stock did not meet the screening criteria. However, there are 2 approaches to see your favorite covered call stock and the option opportunities:
Click the Covered Call tab and then "Search by Symbol" - Several symbols can be added and the search will produce one ITM and one OTM option for the expiration selected.
Use the Option Chain to view all the options and months available for the symbol of interest. The option chain can be accessed by clicking Option Chain under the Covered Call tab.