Sold AA and VIP Calls to Cut Losses

After saying in my earlier post that I wouldn’t make any trades this morning I opened my account to see I was down another $4,000 by 10:00 am.  I decided I had to save something, but knew better than to go all in during one morning.  I checked my spreadsheet to see what I was likely to own after Friday’s option expiration and saw that I would probably have $30,000+ on margin the way things were looking.  In a bull market I’d risk that, but at this point I think I should cut back on my risk and ease my margin exposure by exiting some positions, even if for a loss.

I put three limit orders in on VIP, AA and CMI, all for September strikes (this coming Friday).  I figured if they hit, I’d be forced out of the losing positions I have, but at higher prices than they are currently trading and with a decent premium considering they only have three and half days left to trade.  I priced them all out of the money.

CMI is still waiting to hit and will be at the same strike as my naked put if it hits.  If it doesn’t rise $5 in the next few days, I’ll probably sell at the money ($55) calls and take in a big premium for front month options.

While AA was trading at 26.31, I sold four AA September 27.50 calls (AAIY) for $0.65 each and received $147.00 after commission.  I’m long 200 shares of AA already with covered calls on those shares and I have another 2 naked puts at September 30 strikes I expect to be assigned.  If AA doesn’t rally more than 30, I’ll be out of all 400 shares for a somewhat small loss.

While VIP was trading at 18.87, I sold four VIP September 20 calls (VIQID) for $0.40 each and received $247.00 after commissions.  I have 400 VIP shares with September 25 covered calls on those shares.  I added these four September 20 covered calls to either bring in more cash and lower my cost or to just get me out of the position finally with a smaller loss than I have on paper now. 

At the end of writing this post around 1:30, I’m down only $1400 for the day now and know that that could go in either direction depending on what the Fed does at 2:15.