Quote Originally Posted by keebab View Post
Help me understand this better. Covered calls should return 1-2% in call premium each month on decent stocks right? So you'd need a fuckload of cash to actually make any real return.

Is there any way to borrow say through a protected equity loan or similar and "loan" your package of shares that you then write calls on? You could have a long term put option to protect the downside.

I'm not knocking the strategy, but it doesn't replace an income until you're at least $500K in stocks.
Don't know where you got 1-2% from. The return is based on a number of factors including time until expiration, distance of strike to price, and most importantly implied volatility. So the return is totally customisable to the risk you are comfortable taking.

For example I have been selling puts and calls on a gold mining stock for the past two years. I sell about 45 days out but close usually after 30 days, and get roughly 7% for that.

That stock has an implied volatility of about 60%, whereas there are some stocks that have an IV of 16% and therefore the premiums are much less.

Builds up very fast and then you can sell for even more contracts. Builds up EVEN faster if you're not spraying that return all over a 20 yo's back every week.