How Far Out of the Expiration Date Should I Sell a Call Option?
When it comes to selling a call option, there are many influences, including the amount of premium you want to collect, the stock trend, and the pace of movement.
Published June 8, 2021.
This is the case with most investors when greed comes into play: the bigger the potential gain, the longer it takes to close the deal.
Influences and Maximising Income
When it comes to selling a call option, the amount of premium you want to collect, the stock's trend, and the pace of movement all influence how far out you should set your calls.
If you want to maximize your income, you should stick to generally selling near-term covered calls to increase the number of times you may receive a significant profit.
Covered calls that are far out, on the other hand, may be preferable if you're looking for passive income with nearly no work and minimal expenditures.
Three months out, many long-term investors sell their call options. Due to the weaker stock price predictability, the majority company's earnings and dividends are declared quarterly, every three months.
This increases the risk involved with owning long-term covered call strategies, and such a quarterly update might change your opinion about the call option.
To put it simply, I reckon that there are many advantages and disadvantages to covered calls sold both far out and close in. You are the only one who can choose the appropriate time for your covered call strategy.
Nevertheless, detailed research is necessary, as even long-expired call options can be profitable.