Any Theta Farmers Here?

I am looking at becoming a theta farmer.

I'm a total newbie to this shit.

My plan is to buy deep ITM (in the money) LEAPS expiring 6 months to 24 months from now.

Then sell covered calls against those LEAPS.

My question is... should I close my covered calls early if they are ITM ? Or just let them expire worthless.

It really depends on your risk tolerance. What your describing is the poor mans covered call or PMCC. There are a lot of different strategies that people use to determine when to exit. Personally I will exit if the short delta on the call becomes bigger than the long delta on the leaps, turning the total delta negative.

DrDavo said:

It really depends on your risk tolerance. What your describing is the poor mans covered call or PMCC. There are a lot of different strategies that people use to determine when to exit. Personally I will exit if the short delta on the call becomes bigger than the long delta on the leaps, turning the total delta negative.

Click to expand...

Yes sir, the good ol' PMCC.

I did my first purchase 2 days ago just to test it out.

I farmed $3 after fees... yaaaaay. Since the covered call is out of the money, I'm going to let it expire worthless today (I am not touching it).

But now that I have gotten my feet wet, I'm going to start real farming and collect $4k+.

How often do you check the delta? Daily ? Every few days? Weekly ?

I generally do a quick check on my positions once a day. It's probably overkill, but it's quick and I'm a control freak so it works for me lol.

DrDavo said:

I generally do a quick check on my positions once a day. It's probably overkill, but it's quick and I'm a control freak so it works for me lol.

Click to expand...

Alright, I guess I'll check Monday, Wednesday & Friday then.