Baring it all on BA
I’m getting naked on my BA calls. I own 100 shares of Boeing (BA) already and have sold one covered call on it. A couple of minutes ago, when BA was trading at 86.96 I sold another call, this one is considered naked since I have no shares to be called away if BA rebounds. I sold one January 90 call (BAAR) and received $249.25 after commissions.
I don’t do this often due to the increased risk, but decided to this time because I don’t see BA coming all of the way back up to 95 before the January expiration. To keep me on my toes, I’ll add an email alert to come to my Blackberry when/if BA comes back above 90. I’ll have to decide what to do at that point. I could sell another naked put to get deeper invested in it or could buy shares straight out to cover the higher call if I think it’s going all the way to 95. Of course I could buy back one of my calls and exit the easiest way. I don’t think any of those will have to happen because I expect BA to flatten out soon and stay below 90 allowing me to re-write a new covered call in January as it comes back to life. For now, I feel I’m chasing profits with a bum leg.
Comment by Dan Anton
Sounds pretty hardcore…I was going to try to learn how to invest in the stockmarket at one point, but seems like a world of knowledge..even from reading what you wrote. Only thing I can say in laymen terms is that it’s going to get worse before it gets better in our economy. So I would assume it would lower back down to 90 like you stated; do airlines gain value around holiday season btw? Would be interesting cause of all the traveling you would assume so
Comment by Alex Fotopoulos
I think the airline fluctuations are priced in for holiday travel, but I don’t follow them closely enough to know for sure. I know the near $100 a barrel of oil is hurting them so I won’t touch them any time soon.
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[...] Within five minutes of me selling a naked call on BA it rose. I managed to sell at the absolute bottom. I haven’t had such bad luck on a series of transactions in years, so I’m trying to put myself out of my misery now. [...]