Baytex Energy Corp T.BTE

Understanding Call Option Selling

[Leewardcape]

Ok....so I hold 4800 BTE in my trading account, along with other stuff.. So I set up with my bank the ability to sell covered calls... probably the strategy that holds the least risk,... What is the probability that BTE will be at or greater that $7 by Friday? The market, after commissions puts cash of $314 into my account....what is the downside? My answer? Nothing! If BTE is over $7 on Friday, then I pay an additional commission Of $15 and I'm given cash at $7...what will happen on Monday next? Do any of you know? Do you see my point?

[Cobalt]

Its a nice play , tight but that means you have a handle on this market , i'm guessing , give us your forcast more often :) , down side you risk upside gain thats about it.

[Unlucky13]

The only downside would be if you see a dramatic jump in the stock.  If you had sold $6 covered call options and watched BTE jump 85 cents in two days you would be out of luck and miss all that upside.  I think you will win on this trade and add additional revenue because $7 by Friday is a real long shot.  The more shares you do this with the grater the risk.  But not a bad

[Paray99]

I don't see much advantage with this strategy at this point. There is more chance to loose here... BTE might cross $7 and you are taking out the profits you will make otherwise with your 4800 long shares.... Covered call is good when you are anticipating a price drop soon.

[Decaffeinated]

If you are asking for advise like this on the board you shouldn't be trading..