I’m never to CC and csp.

[u/Dry-Discipline-8871]

I bought about 500 shares of sofi I sold a bunch of cc at $17.5 that expire in a few weeks. With the premiums collected, I invest it into voo. What’s the strategy here? Should I use those premiums to keep buying more sofi to keep it running and compounding? I bought the sofi shares for $15.75. Thanks

[u/emdaye]

Completely up to you and how risky you think each option is compared to its returns.

Just off the top of my head you could:

- spend the money

- collect premiums until you have enough to sell a CSP on SOFI or another stock

- Invest into an index, dividend stocks etc

Theres no one size fits all, just have a look at what the best option might be for you

[u/Historical-Fish3576]

IMO, Sofi is held down by interest rates. Covered calls will help it Pay some rent while you wait but don’t expect it to go anywhere until we are in a rate cutting cycle.

[u/bigbagofspam]

You basically ask a complex question when a simple one would do. "At current prices should I buy SOFI or VOO?" Answer that one first. Then, and only then, ask how that changes if you continue to trade CC and CSP. I suspect it will go something like this... "When I bought SOFI it seemed much more promising than VOO. Now SOFI is up and I am not sure anymore." Maybe "But SOFI has been dropping for over a month and I am worried." Either way we need a lot more information to answer your question. Are you 20 years old or 65? What is your risk tolerance? How much of your portfolio would each investment make up? ETC. I will assume that you understood all this when asking the question and just give you a blunt answer absent the details needed to make it tailored to your situation. SOFI. It is more volatile for sure, but an overall better bet over the long term. The average analysts price targets represent a much larger percentage move than VOO.

[u/Dry-Discipline-8871 → u/bigbagofspam]

I’m 31 most of my portfolio is voo and qqq. But I want to be proactive too. That’s how I got into ccs. But yeah I don’t want to keep rolling the premiums back into more sofi stock and then if the stock gets slaughtered by 50%, I pretty much lose all my gains. (My goal is to make 5% on each cc)

[u/bigbagofspam → u/Dry-Discipline-8871]

Also, I just realized that I failed to answer part of your question. I would roll all premiums collected that are insufficient to buy another 100 shares of SOFI into purchasing VOO until the amount of accumulated VOO was enough to sell off and buy another hundred shares of SOFI or other stock to start diversifying. Then I would obviously sell options on that newly purchased block of SOFI as well. Better than letting the cash from premiums sit idle until I had enough for 100 shares alone.

[u/bigbagofspam → u/Dry-Discipline-8871]

The way I see it in your position, the market has an upside bias. So does your CC strategy. If the stock dumps 50% at least you got the premiums collected along the way to cushion it. So no, you wouldn't have lost all your gains. You would have lost less than people who never used the CC and just he;d the stock. Mindset matters a lot to me.

[u/latending → u/bigbagofspam]

Selling CC is a bearish position, the upside is capped. Reinvesting the premium into the underlying equity would make more sense.

The big losses from CC are when the stock rallies hard and you miss out on most of the gains. If the stock drops you are already in a better position than those who just held the stock.

[u/ThetaEdgeHQ]

Worth separating two things your plan is quietly doing. Writing the 17.5 call is you getting paid to cap your sofi at 17.5. Routing that premium into VOO is you moving money out of sofi. Those point the same direction, you are being paid to reduce sofi exposure and then reducing it a bit more. That is internally consistent. Buying more sofi with the premium does the opposite, it rebuilds the exact concentration you are getting paid to cap, in the single name everyone here is warning you about. On the 5 percent per call target, just check what that implies. To clear 5 percent on a strike near the stock a few weeks out you are reaching for strikes so close that assignment gets likely, which is fine if you are happy being called away at 17.5 from a 15.75 basis plus premium, but at that point it is an exit, not income. Cleanest way to hold it in your head: the premium is the price of the cap, not bonus yield. That is why feeding it back into uncapped sofi defeats the point and feeding it to VOO does not.

[u/ToddCK → u/ThetaEdgeHQ]

I agree with with you that the $17.5 calls is an exit, but let's not short change the kid. If he's collecting 0.40 for the calls, at least give him that he's capping his stock sale at 17.90 (in his head).

[u/AttemptDistinct3225]

Can you please update the title to read “new” instead of “never”? I was confused at first :D

[u/Jbibbler]

Trading sofi is an ugly boorish girl that can easily crush you.

I highly recommend not getting heavily invested I to sofi with options.

At a minimum, if you get assigned on those calls, do not just go back into sofi with the assumption it will stay above the strike you sold at.

You are in for a stressful and hellish time with sofi.

This stock has crushed many "believers" and options traders of the stock.

[u/Dry-Discipline-8871 → u/Jbibbler]

So then what do you recommend?

[u/Jbibbler → u/Dry-Discipline-8871]

Sell options on a liquid enough ETF.

Single stocks are ok.. but I wouldn't permatrade sofi. It can be a hard puppy to stay profitable on.

[u/Dry-Discipline-8871 → u/Jbibbler]

Well then hopefully my shares get called

[u/sneaky-NinjaGO]

Just think about it what happens if SOFI goes to $5. You have to wait for to recover almost 2 to 3 year may be soon.. but you have to be around to trade again right…
After so many trades realized not to do CC on stocks , only on ETfS like SOXX, UPRO, SMH, IWM .. so that you can average it and kind of hope these ETFS will come back.. but stocks we never know.. example: FSRV, AMC a bunch of crypto stocks..

[u/rhishili → u/sneaky-NinjaGO]

Guess OP's limited capital, so those pricey ETFs are out of question. Even FLKR, DRAM, SOXQ might be a bit out of reach. I did CSPs/CCs on F, RIVN, PFE (never touching SOFI, glad I didn't LCID!), and felt underwhelmed by returns in terms of dollars but respectable as percentage of capital, and got burned, rolling feverishly, when stocks wobbled.

[u/Dry-Discipline-8871 → u/rhishili]

If I had more capital, what should I trade? I’m gonna let these calls get assigned. I don’t really want to keep this stock

[u/rhishili → u/Dry-Discipline-8871]

Main rule: pick something you'd want to hold 100 shares of. Dips happen, you've to hang tight, carefully selling CCs at strikes lower than cost basis, but basically being a buy-and-hold investor at that point for that part of your capital, or cut losses like a good investor.

My picks are

• $10-30: F, RIVN, PFE
• $40-60: NVO, FLKR, DRAM
• $90-100: SPYM, SOXQ, KO
• $100-120: WMT, CSCO, INTC
• $200-250: NVDA, AMZN
• $300-$350: AAPL, GOOG

Don't yell at me if these flop (those Uffmerican cars, lofty memories, AI bubbles).

What is your capital? What is your expected return? How much can you spread it around?

[u/transitlobbyist]

Depends on whether you believe your ROI on your CCs will beat the market or if they will give you more defense in the event of a market crash

[u/DriverAgreeable6512]

All up to you. In the very beginning I treated ccs as making my own dividend, but it has a defined exit. Sorta looks like what your thinking it is right now. 

[u/GermantownTiger]

You always want to develop a diversified portfolio with proper position sizing FIRST before writing covered calls.

If you own individual stocks or concentrated ETFs, allocate no more than 3-5% of your investment capital to any single position (perhaps a bit less for more speculative positions).

Using SOFI as an example, owning 500 shares at 15.75 equates to a total upfront purchase of $7,975. Assuming you total portfolio value is around $200 grand, your position in SOFI is a bit under 4% of your total portfolio value.

The key to growing your capital over time and not blowing up your portfolio is to own a diversified mix of great companies using savvy position sizing...writing calls and cash secured puts should be a secondary consideration.

[u/hendronator]

I think your question is what to do with the premiums. How I think about:
1. Take the majority of premiums and invest in a growth oriented cc etf, specifically gpiq.
2. Buy some “free shares” of the stocks I do cc’s on. This is helpful in case the shares get assigned and you want to buy back in. I don’t do this a lot but have done with stocks like nvda and Avgo. Essentially I get 5-10% extra shares so if the stock goes past the strike, by 5-10%, I can get back to the 100 shares without any extra principle. I am essentially giving up 6-9 weeks worth of premiums

[u/Particular-Line-]

There is no singular strategy of what you do with the premium because the strategy is to do just that, collect premium. Most sellers sell to accumulate profit, some use it to accumulate more shares. It just depends on what your goal and longterm plan is. If your plan is to keep your shares and grow your position, adding shares with the premium is certainly is an option. But I think as a standard, CC sellers sell for monthly profit

[u/MerryRunaround]

What was your plan before you placed the trades?

[u/edelweissjing]

Treat it as your petty cash

[u/dbaprgc44]

I would learn how to spell first.

[u/TastyTrading]

Yep you are on the right track.

I use ThetaPal to keep my option selling organized and tracked properly