1d • General discussion
Justin asked — Why do we close out - Lets break it down!
🧠 When we open the trade
- We sell a covered call
- Example: $0.90 premium
👉 That’s $90 per contract (100 shares)
Money in our pocket upfront 💰
⏳ What happens next
- Time passes
- The option loses value
Now it might be worth $0.05👉 That’s just $5
🔄 Closing it out
We do the opposite trade:
👉 Buy to close for $5
💰 The result
- Collected: $90
- Paid to close: $5
👉 Profit: $85
🔑 Why we do this
- ✅ Lock in most of the profit
- ✅ Preserve our shares (we keep the stock)
- ✅ Remove risk
- ✅ Ready to sell another call
🎯 Simple takeaway
Sell for $90 → buy back for $5
👉 Keep ~$85👉 Keep your shares👉 Repeat the process 🔁
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Justin asked — Why do we close out - Lets break it down!
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