Sold 8 NVDA Covered Calls

NVDA broke support yesterday.  The 10 day moving average had been shaping up as a key line of support, but NVDA fell below that line intraday yesterday and then rallied to close above it.  Today it didn’t even make a worthwhile attempt to cross above that 10 day line and even fell below the lower 20 day moving average. 

Since I was using those lines as an excuse to hold my 800 NVDA shares without selling calls I had to cave once the line was broken.  Had I noticed it yesterday I would’ve sold some calls then.  Instead I waited for it to drop this morning.

While NVDA was at 18.96 I sold my first block of calls at the May 20 strike (UVAED).  I sold four covered calls and received $447.00 after commissions.  I didn’t want to cover all 800 shares yet in case NVDA rallied, but then decided I should sell calls on the rest instead of trying to time the stock. 

I changed my approach a little to allow for more capital appreciation from the underlying stock itself, not just the option premiums.  I put a limit order in to sell farther out of the money calls and while NVDA was trading at 19.00 (30-45 minutes after my first order hit), I sold four more covered calls.  These were at the May 22.50 strike (UVAEX) and I received $227.00 after commission.

I wouldn’t be surprised to see NVDA back up to the mid-20s in the next 6-8 weeks, but I have to continue with the trading model that has worked for me for years – sell time and increase my chances for more steady returns.  This is even more important for me to stick with since I no longer have the time to watch each equity as closely as I’d like with a busier job these days.  Had I been watching, I would’ve sold the calls on NVDA yesterday as soon as support broke, nearly $1 higher than where it was when I ended up selling my calls this morning.