Added MON Call, Dumped JOYG Call

MON

MON continues to bounce between $70 and $90. This morning it continued its upward swing it’s been on for a very short and steep stint. While MON was trading at $85.86, I sold to open one November 90 covered call (MONKU) at $5.00 and received $489.25 after commissions. This is my second sell trade on the same option. On October 23rd, I bought this same call option back for a profit and paid $330.74. By getting out and getting back in I added $158.51 to my bottom line.

I’m still short one MON November 60 naked put that I plan to let expire worthless. I considered trying the same thing on it – buying it back while I have a profit and selling again when MON falls, but instead I’ll just sit tight and try to exit MON at November’s option expiration or write a new call and new a new put again if this expires out of the money.

JOYG

After hitting $19.06 last week, JOYG has been making a comeback. While JOYG was trading at $25.21 I bought to close my one JOYG November 25 call at $3.10 and paid $320.74 with commissions. I originally received $369.25 for selling this call, so I got out with a small realized profit of $48.51. I still own 100 shares and I’m short two November 40 naked puts. I expect those to be assigned and didn’t want to sell some shares at $25 while buying new ones at $40. That’d kill me on taxes since the wash rule would come in play and not allow me to take a loss on a stock that I bought more of within 30 days. I have no idea where JOYG will move in the next 3 1/2 weeks and figured I should cut my risk some by taking a profit while I have it. When assigned the next 200 shares I’ll write covered calls on all 300 out of the money. I expect JOYG to bounce around for months, so I’ll be happy to take the premiums in while we wait for the markets to turn. If $19/20 can remain a floor on JOYG, the premiums will be worth holding the shares. If nothing else has changed for me in this market, my time horizon certainly has.

9 Comments

Comment by Jimmy Chin

You got most of the profit already in your MON naked 60 put…why not take the liability off the table?
Comment by Alex Fotopoulos

I probably will tomorrow. I’m still thinking about it. If MON drops $30 from here I’ll probably be ready to own more at that price.
Comment by mule65

I’d hold the 60 Put with 33% (0.90/2.60) left.
Comment by Mark

mule65,

Can you explain your comment there?
Comment by mule65

Mark- Alex sold the 60 Put for $2.60. He could buy it back for $0.90 and close for a $1.70 profit. Or, he could wait 3 weeks and keep the full $2.60. It’s unlikely that MON will drop under $60 by Nov-21 so I’d let it ride or roll it to another strike.
Comment by Mark

All,
I sold 4 POT Nov 55 puts a few weeks back for $3.10 each. Would you close the position now as the premium is down to $1.20 or ride it out for three weeks? Personally, i would close it if i had any other potential put sales but with the market up so drastically and a personal belief we will most likely come close to testing the Oct 10 lows again, I’m hesitant to open new positions. Thanks.
Comment by Alex Fotopoulos

That’s a long way out of the money. I’d probably hold and let the last bit expire over three weeks. On the other hand, if you think it’s coming back down you can do what I did on MON with puts instead of calls. Buy it back now, but go ahead and put a limit order in at a higher price at the same strike. It all depends on when you think it’s coming off its current rally. 55 is low enough that I’d feel safe, but we know this market isn’t normal now.
Comment by mark

Thanks Alex. My inclination is to just hold to term. I also hold 4 NOV puts at 25 and 4 JOYG puts at 22.50. I feel the same for those as well.
Comment by Daitondimeny

I would close it if i had any other potential put sales but with the market up so drastically and a personal belief we will most likely come close to testing the Oct 10 lows again, I’m hesitant to open new positions. Thanks.