I get a notification from robinhood that confuses me. So, here’s what I have done. I bought covered calls for NVDA at $1.36 expiring on nov 26th. This means I got $136 credited immediately. So, far everything is clear.
Now, I keep getting these random push notifications from robinhood that the call I purchased has gone down by 10%, gone up by 15%, etc. etc. Am I actually losing any money here? I just want the option to expire on nov 26th. Therefore I’m guessing that fluctuation of the call doesn’t matter to me (as long as the stock price doesn’t come close to my call price). Am I right?
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If you SOLD a covered call and the call is now worth 10% more meaning if you buy it back you pay 10% more (hence 10% loss). If it is 10% less then you can buy it back for 10% cheaper and you make a 10% profit.
You buy a call if you're bullish on the stock, you sell a covered call if you're long term bullish but wanna make some money in the interim when you feel stock price will go down. You sell a naked call (no collateral) if you're extremely bearish on the stock and are 100% sure the buyer won't exercise the call and it will expire worthless.
Sell a naked call
Sell a covered call
Buy a call
Buy a put
There's no such thing as buying a covered call. So many people have told you that so many times but you keep using that phrase. It's almost as if you don't wanna READ.
Investopedia has good examples.
I think you sold a covered call.