Also, you gained the 10% over a period of 3 months or whatever period it took before your FB stock was called away. Write enough calls and you can buy more shares of FB.
Could be your leaving a lot of money on the table. Let's say that you write calls at a strike price of 88, the chances of FB reaching that target is relatively low in 3 months. All that premium is yours to keep. The worst case scenario is that your FB stock is called away. Still not a bad result because your FB stock went up 10% and you might have sold it anyway. You still keep all the premium from when you wrote the calls.
You got it all wrong. FB is a trader's dream and an investor's nightmare. If you write options against your long position you could make a fortune with FB.
I've been investing and trading stocks and options for almost 10 years...to me FB is a trader's dream and a value investor's nightmare. Writing covered calls is probably the safest way to trade FB. And to be extra safe write the calls for approximately 3 months from expiration. When expiration month approaches, adjust your position by buying back your calls and writing calls around 6 months from, expiration. If you think that FB is going to pullback, you can take some of the premium from the calls you wrote and buy puts. This is known as a "collar."
To some extent you're right, but remember FB has only been publicly traded for a year or two, so a lot of the stock is still in the hands of institutional buyers, hedge funds, and market makers. The "Big Boys" basically have just been looking at FB's pattern of trading and shorted when necessary to make their bucks.
Pretty much agree with your opinion, but options expiration has little to do with it. The amount of money invested in FB options is nominal in comparsion to the amount of money invested FB stock.
And as they say on WS, "money talks" and the option-traders follow.
It depends a lot on which month you write the calls for, if you write the calls for expiration month then it's quite possible that your stock may get called away. But if you write the calls for about 3 months from expiration, it's unlikely that stock will be called away.
That's pretty normal with most stocks. On lower volume days it's easier for shorts to manipulate FB, on higher volume days value investors are buying in.
Better yet, Zuck should forget about a suicide hotline and create a shareholder's complaints against market manipulators hotline....sounds good to me.
Market was up today...too many other hot stocks around, so that reduced the attention and the volume of BBRY. But tomorrow a.m. expect a pop and Canadian buying....