Canopy Growth Corp (WEED)

[stoner422]

I'm certainly not a pro at all on options yet but I have tried a couple different strategies and I know enough to tell you to stay away from "calls" you'll just waste your money. You want to trade "covered calls". Covered Calls mean you have to own the stock to place the trade. I'm no teacher but here goes. (I won't do covered calls with CGC, currently doing them with APHA and ACB)
Basically you sell contracts against your shares and you receive a premium for those contracts. Each contract consists of 100 shares of a stock. The shares are priced differently in relation to the "strike price" For example a February 15th strike price of $10 on APHA is priced .35 cents a share. That means one contract is worth $35 dollars (.35 cents X 100) I sold 10 contracts which equaled $350 dollars. All that means is that I am agreeing to sell 1000 shares of APHA at a strike price of $10 and for that offer I received $350 dollars that is mine to keep no matter what. So if APHA goes up or down it doesn't matter I get to keep that $350.

If APHA goes up to $10 my 1,000 shares will be sold and removed from my account and replaced with $10,000 dollars ( the value of 1000 shares of APHA at $10 plus I still made the extra $350. Now here's where it gets interesting if I haven't lost you yet I'll try to now LMAO!!!

You really don't want to lose your APHA shares so when you're doing a covered call you're hoping the share price goes down away from your strike price. As the share price goes down the price of the premium also goes down. Remember above we received a premium of .35 cents a share? now if the share price has dropped a dollar or two the premium might now only be worth .15 cents. Now you write an order to buy back your shares for .15 cents, you end up buying your 10 contracts back at $175 that you received $350 for...……… and you pocket $175!


Of course you do this with larger premiums to make it worth while. The ones I did last week were .93 cents a share and .73 cents a share. Those I already have a limit order in to buy back at .50 cents and .40 cents respectively. If they fill that would mean I pocketed approximately $700 for my two covered calls I wrote last week and I still have all my shares. The only risk in covered calls is that you miss out on upside gain if the stock price goes over your strike price. it sounds complex but it's pretty simple. You should buy the book "Covered Calls Made Easy" by Matthew R. Kratter it was $3 bucks on Amazon and the book is so short it literally takes 20 minutes to read and really explains all this easier than I did. Feel free to ask me any questions and I'll answer if I know it.