Strategies
Strategies.
How-to explainers for the strategies Closelook actually uses — covered calls, the barbell, position sizing, hedging, rotation. Each piece pairs the mechanics with current market data and a Closelook-portfolio application. Diary, not advice.
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Covered Calls for Premium Harvest — Quantum, AI, and the High-Beta End
When implied vol is 80%+, a 30-day call sells for 5–10% of the underlying. The income looks irresistible. The drawdown risk explains why most people lose money trying.
On a high-beta name with 80% implied <a href="/glossary/vix/">volatility</a> — quantum-computing stocks like IONQ, RGTI, QBTS, recent AI IPOs, small-cap thematic plays — a 30-day call struck 10% out of the money can pay 5–10% of the underlying in premium. That's a 60–120% theoretical annualised yield on the option overlay alone. The catch: the same names move 30% in a week in either direction. This is Part 2 of two; Part 1 covers the slow, conservative end. Here the question is not 'is the premium worth it' (it usually is, mathematically) but 'can you survive the realised-vol path that justifies the implied vol you're selling.'
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Covered Calls for Income — the Dividend Aristocrats Approach
Stack a 10% out-of-the-money 6-month call premium on top of a 2–4% dividend yield. The conservative end of covered-call writing — how the math works, when it pays, what it costs.
A covered call on a Dividend Aristocrat — say KO, JNJ, PG — at a 10% out-of-the-money strike with 6 months to expiry is the slow, conservative end of options income. The premium is modest, the cap on upside is wide, the underlying is famously dull. Combined with the existing dividend yield, the total cash-return profile lands in the 6–8% annualised range on low-vol blue-chips, with a 10% cap on capital appreciation over each six-month window. This is Part 1 of two; Part 2 covers the opposite end of the spectrum — high-beta quantum and AI darlings where the premiums are massive but the drawdown risk is too.
2 explainers on file.