Most traders don’t struggle with covered calls because the strategy is broken. It’s because they start in the wrong place: Scrolling through random tickers, chasing yield, or forcing trades on stocks that don’t belong in an income strategy is how accounts get chopped up quietly over time. In this clip from options strategist Rick Orford’s latest video, he walks through the exact screening process he uses to narrow the entire market down to high-quality covered call candidates—before ever looking at a char ...

Group 1 - Earnings season is approaching with major companies like Taiwan Semiconductor, JP Morgan Chase, Wells Fargo, Bank of America, Goldman Sachs, and Delta Airlines set to report [1] - Earnings season can increase option premiums, but not all setups are advisable to pursue [1] Group 2 - It is essential to focus on a limited number of trades where risk and reward are favorable [2] - Implied volatility (IV) typically rises before earnings, but using IV Rank to filter stocks with high premiums is crucial [3] - A recommended IV Rank is above 50%, ideally 70% or higher, indicating that options are overpriced relative to the past year [3] Group 3 - Liquidity is vital for trading options, especially during earnings, as it allows for quick adjustments [5] - Tickers should be screened for tight bid/ask spreads (preferably under $0.20), open interest above 500 contracts on near-term strikes, and total call option volume over 5,000 contracts [8] Group 4 - There is no universal strategy for earnings trades; the choice depends on expected moves, volatility crush, and directional bias [9] - The best trades are structured outside the expected move range [10] Group 5 - For a neutral bias with high IV, consider strategies like iron condors or straddles to sell premium and benefit from post-earnings volatility collapse [11] - For a bullish bias with high IV, selling put spreads or naked puts just outside the expected move can be effective [11] - For a bearish bias with high IV, using call credit spreads or bearish calendars is advisable, while being cautious of crowded long setups that may lead to significant downward moves [11]

Core Insights - Implied volatility (IV) serves as a crucial indicator for options trading strategies, guiding traders on when to enter long or short positions based on volatility conditions [1][4]. Group 1: Long Options Strategy - Traders should consider long calls or puts when implied volatility is below 50% but showing an upward trend, indicating potential opportunities [1]. - Companies like Microsoft (MSFT), Apple (AAPL), Altria (MO), and Caterpillar (CAT) are highlighted as having low implied volatility, making them suitable candidates for long strategies [3]. Group 2: Short Options Strategy - Short options strategies, such as covered calls and cash-secured puts, are most effective when IV Rank and Percentile are above 60-70% but trending downward [2]. - This approach allows traders to collect higher premiums upfront, benefiting from the erosion of option value as volatility decreases [6]. Group 3: Trade Screening and Strategy Alignment - Barchart provides tools to screen for trades based on volatility conditions, simplifying the process for traders to identify suitable options [3]. - The distinction between debit and credit strategies is emphasized, with debit strategies being optimal in low but rising volatility, while credit strategies are best in high but falling volatility [6].