Should I do Covered Writes with SPX at record levels at $2120??

If you still like a particular stock, the answer is YES! The key is how you do the covered write. Let’s give a trade example.

Trade example #1 AAPL $129. AAPL has been in a range of 125-132 over the last few weeks. This year, it is up about 16% from the $110 level. We are not at the highs, but getting close. If I was concerned about the market backing off and dragging AAPL back down a bit, I would look at an ITM covered write. I would buy 100 shares of stock ( some may already own the stock). I might sell a June 125 call against the long stock. The call is trading at around $5.80 with the stock at around $129. This would give me more downside protection, the breakeven is at $123, below the support of the last 6 weeks. Selling this in-the-money call would cushion us for about a 2 1/2 % drop in the stock over the next month.