You generally want a stock you own to go up. Covered calls are the one exception...
TLRY has been a dog of a cannabis stock that I have owned for about three years. I bought 200 shares of the stock when it was at around 4.00 (I had a thing about cannabis stock) and it crashed down to around $2.00. I hung on to it and have been writing small covered calls (at $2.50) to earn a bit of cash from it.
But then it went well over three and looked it it was on it's way back to $4.00. Having covered calls means that someone could buy the stock from me @ 2.50/share even if the stock was at $5.00. That is the risk you take when you sell covered calls. I played around with it and did a "diagonal roll" of the stock to cover it out to $3.00 so I will make more profit if it still goes up. But I lost my original profit and had to eat $8.00. I could still miss out on potential profit if the stock keeps gong up.
But I suspect that it will come back down to earth when it become more apparent that they bought the unprofitable lines from AB. It is interesting to have a cannabis company also working with beer. Seems like a good company to get employee discounts. Either way, I am hoping the TLRY stock keeps going up (even if I have to continue to roll) and that AB keeps doing down!
yeah... when I wrote the calls... I would have been happy to sell at $2.50 as it has hovered around $2.00 and I am not married to this dog. But after watching it go to $3.10 - I was thinking.. hey for $8.00 I can cash in on an extra $100 for 200 shares and 50 cents more.
If I move it way out to Dec or Jan - I could actually "make money" rolling it diagonally up to $3.50. But I tend to write them out no further than the next monthly - so I can repeat it every month. I wrote off losses on some other dogs earlier this year, so there is not a tax problem.
I normally write "out-of-the-money" covered calls at prices I'd be happy to sell stocks at and generally try to defer it into the next calendar year so I have the money immediately and the tax liability is deferred. You don't make a killing but it does provide free cash flow. And it really applies only to a small portion of my portfolio, right now EIX (Jan 77.5 and 80's), ALKS Jan 30's)
I read an article about how AB had their marketing department in St Louis for a hundred years. Then that European company bought them and moved the dept to NYC and changed personnel. They deserve all they are getting.