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I have this stock more than 2 yrs and wont go up , I am planning to sell covered calls all my shares just to return my capital ... example my average cost is 5 and I am planning to sell it at a strike price of 3 (cause the premium is enough to return my capital) and the expiration date is after a year. Is this ok??? (at this point i dont care if the stock rises after a year ive made up my mind) .... thank you

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  • Make sure that your numbers are correct, they sound too good to be true. Specifically, the premium you get for a call is usually for 100 (!) shares, so make sure you didn't overestimate your earnings per share by a factor of 100.
    – Solarflare
    Commented Apr 5, 2023 at 0:51

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You should consider your opportunity cost. It sounds like you've already wasted two years hoping that it will go back up. Rather than spending the next year trying to claw back some losses by selling covered calls, why don't you sell it all now and invest the proceeds in something with better prospects?

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If you cost basis is $5 then in order to break even, you would have to receive $2 for the covered call. Is that the case here?

More information would enable a more detailed answer (stock symbol, current stock price as well as option premium and expiration).

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  • I am thinking that you are in the United States. One thing you need to consider is taxes. For example, if you sell it now at a loss, will the loss save you a significant amount on your income tax?
    – Bob
    Commented Apr 10, 2023 at 3:09
  • USA: Losses offset gains with a maximum deduction of $3k per year after the offset, unless one happens to have Tax Trader Status. The other factor is one's tax bracket.
    – Bob Baerker
    Commented Apr 10, 2023 at 17:03

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