Summary:
I currently hold ~900 shares of Nvidia at a cost base of under $5 and am exploring covered call strategies to earn premiums with minimal risk. I’m bullish on Nvidia long-term but believe the parabolic growth trend might slow down, given its current $3.3T market cap. I’d like to keep some shares but am comfortable being assigned if I select a strike price that aligns with my long-term goals. My plan is not to hold until expiry but to take profits around the 50% mark and roll to new strikes/dates.
I’m seeking advice on the best entry strategies for strike price and expiry selection. Most guidance suggests:
Using weekly or monthly calls
Targeting strikes with a delta of 0.1–0.15 to reduce assignment risk
Avoiding red days, earnings periods, and significant news events for entry
What strategies do you use for covered calls? Do you look for specific price movements before entering, or do you rely on moving averages like the 50/100/200-day? I’d love to hear your approach and how well it’s working for you.
Key Questions:
How do you determine your entry strategy for strike/date?
Do you target a specific daily % increase before entering?
Do you incorporate technical analysis, such as moving averages?
Hale said:
Why is the low-cost base relevant? Your cost base shouldn’t influence your decision-making—it’s the current value and risk that matter.
With a low-cost base, I view the trade as low-risk. If assigned, I’m happy to sell and realize my untaxed gains. If the option expires worthless, I keep rolling without substantial downside compared to someone with a higher cost base who might face losses if the stock declines.
@Katherine
Cost basis doesn’t actually change the downside risk in real terms. What matters is the current market value. If you wouldn’t buy Nvidia at today’s price, holding it is effectively the same bet. Selling CCs is more about capturing short-term premiums, not about your original cost base.
Market cap shouldn’t drive your strategy—sentiment and earnings do. If there’s a strong case for price growth, even a $3T company can grow larger. I prefer selling CCs around earnings because implied volatility is higher, which means better premiums. I aim for far OTM strikes with low delta (<0.10).
@Eli
Interesting—most advice I’ve read suggests avoiding CCs during earnings due to volatility. Do you have a specific threshold for what you consider “worthwhile” premiums, or is it more subjective?
You’ve already won with Nvidia. Why risk complicating things? Sometimes it’s better to let your investment work instead of trying to squeeze out extra returns.