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Strategies & Market Trends : Option Strategies

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From: Joseph Silent	7/22/2020 11:36:45 PM
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Hello Options Experts ... I have a question, and Bob suggested it may be a good idea to ask it here. Say I buy some long-dated calls (say 1.5 years out) and they are now a bit in the money. 1. Does it make sense to, and can routinely I sell OTM (covered) calls against the above on some shorter (say, monthly) time-frame to collect some very small premium? I realize that they had better be far enough away so that I do not get called. 2. If they are far enough OTM and I do get called, it will not be at a loss I guess since the underlying must travel the distance to get there, and that is profit. However ..... 3. If I do get called, does the broker (currently Fido) automatically square the trade on expiry, or do I have to do some gymnastics to get out of the jam before expiry? I was thinking about this and I realized that I don't know if the strategy is a good idea and also what would happen if I got caught by being called. Many thanks for your thoughts, J :)

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