So @Sunroof let's go into the theory a bit on why I think covered calls are really smart for you.
Let's round up to 4000 shares for the sake of argument, and let's assume you get in at current prices (when I started writing this post). That assumes a $13.74 share price, the 2/19 $15 call being $0.40, and the 2/19 $12.5 call being $1.55. So my strategy for you would be to do the following.
1. Buy shares as usual 2. Sell covered calls on literally every share you own (sell to open) 3. Wait until the contracts expire. You never buy these contracts back ever. As you get better at this you can open it up as an option but for now just assume you'll never sell them. In basic terms the net effect of what you're getting here is this.
* Your money becomes "held" in EVRI because you're obligated to hold onto the stock through 2/19 to fulfill the contract as needed * You reap the upfront cost. For the $15 call you make the price x 100 x 40 (number of contracts you hold). So you sell the $15 call you make $0.40x100x40, or $1600. For the $12.5 call you make $1.55x100x40, or $6200. * If the price of the stock is equal to or higher than the strike when the contract expires, you must sell at the strike. For the $15 call that means you're selling your EVRI at about a 10% gain which is win/win. You'd make a profit of $1.26 on each share, so $5040,as well as keeping your contract fee of $1600, for a total gain of $6640. For the $12.5 call, you're technically selling at a loss, but even at $12.5 you'll make a small net gain on the transaction (your effective cost on the stock becomes what you paid for it, $13.74, minus the price of the contract, $1.55 or $12.19, meaning you basically bought 4000 shares at $12.19, sold at $12.50. You basically make $1240 in this case. * If the price is lower than the strike, you keep the stock, meaning you got $1600 or $6200 for free, just as a price for freezing your $50k in place. Now this can be somewhat a bad thing. For instance if EVRI dropped to $9, you'd be holding bags at some level. But if you want to damage control this outcome the $12.5 call sell is a bit better for you, as you'll always keep the full contract premium * Of course if the price goes way up, your gains limited-- for instance if it goes up to $20 before 2/19, you're still only making $6640 with the $15 call sells and $1240 with the $12.5 call sells But either way, it's guaranteed very safe money if you really believe in the stock you're backing. I'm doing this with AAPL once my E-Trade money clears.
You can get more advanced with it later, but for now I'd start with this. Let me know if this made sense.
I appreciate you putting time into explaining this for me. Its a bit over my head at the moment so Ill have to re-read it when I get off work later. It sounds like it is much safer than what I normally do though, and I can still make big gains somehow.