NVDA Option Assignment
I’m glad I was planning to take the NVDA 32.50 naked put option assignment. Someone pulled the trigger on me yesterday, so the shares were assigned this morning. I received this email from TD Ameritrade:
You have recently been assigned the following option position: 4 UVANZ
I have been surprised this wasn’t assigned earlier considering the amount in the money it was and then realized that the buyer was waiting for their earnings to come out. Here’s what I’ll have after expiration today if I don’t buy my other four options back:
Feb 32.50 Puts -UVANZ $507.00
Feb 25 Calls – UVABE $567.00
Feb 25 Puts – UVANE $587.00
400 shares assigned $(13,019.19)
400 shares assigned $(10,020.00)
Total Cost $(21,378.19)
Avg Per Share $26.72
Current share price $22.61
After I missed out on getting out when I should have yesterday at mid-day, I’m actually considering taking the full 800 shares on. That would be 22% of my portfolio in one stock. I don’t like that, but I do like NVDA long term. The premiums are still rich and I could even sell in the money calls on all 800 shares or if they bump up, I could sell OTM April 25 options and end up coming out break even or better.
Better than thinking of my profit on this particular position, I think I need to consider first if I could use my cash elsewhere to make more money. That’s the tough part now and the reason for my hesitation. The returns could be great on NVDA if I hold on, but that’s a lot of eggs in one basket. I left my limit order in from yesterday to buy back the Feb 25 puts at 1.40, but they last traded at 2.41, so it’ll take a little rebound for those to hit today. Even if I take the assignment on the other 400 shares I can still sell those shares on Monday instead of selling calls on them.
I drew a trend line from the past 16 days that shows NVDA’s lows are getting lower, but offered support for the fourth time yesterday. The debate in my mind now is if four was the last test before it breaks or if NVDA will pull a CSCO and rebound after their earnings report, especially since they reported good numbers.
Comment by Options Strategery
I did a lot of trading too (Last minute juggling of SIRF and BBBY). I am looking at a 30% paper loss for the NVDA puts I sold yesterday but most of that is intrinsic value.
I normally sell try to sell for maximum time value but that’s tricky if your cost basis is higher than the current ATM strike. That’s one of my biggest failures as a trader. I buy things on the way down but get out too early due to low strikes on the covered calls I sell. I have a feeling that I take way too much risk for very little return. I suppose I need to ladder out just like how I ladder in
Comment by Alex Fotopoulos
I think you’ll be able to ride those calls out. NVDA’s fundamentals are strong still.
Speaking of laddering out and NVDA – That might be my plan for getting out. I’m thinking of holding all 800 shares and selling some April 22.50 calls on Monday and then waiting out a better price for the April 25 calls. At least that’s my though of the hour.
For those who haven’t been reading Options Strategery yet, you’ll like it if you like this blog. We have a similar trading style although he uses delta more than I do.