Rolled FCX Covered Calls
I mentioned a few posts ago that I planned to dump Freeport McMoran Copper & Gold (FCX) when the options expired tomorrow, but then it kept falling and my thought process changed. For a short stint today FCX dropped below my strike and I started thinking that maybe I should hope it stays below $22.50 so I can re-write my calls at a higher strike and then the markets changed directions. FCX went from an intraday low of $21.97 to an intraday high of $23.99. My taste for FCX changed. I checked the option premiums for February and decided to roll my covered calls.
While FCX was trading at $23.81 I bought to close my January 22.50 covered calls (FCXAX) for $1.64 and paid $339.49 with commissions. Originally I sold them for $1.76 or $340.50 after commissions. Yes, I netted a full dollar and a penny. I went right back in and put a limit order in to sell new calls. Instead of continuing the rally that I thought was only taking a short break, FCX continued its new slide. I kept lowering my limit and finally changed my limit order to a market order and when FCX was trading at23.54 I sold to open two February 25 covered calls (FCXBE) for $2.37 each and received $462.50 after commissions.
Through this roll of the covered calls another month out and to a higher strike I increased my cash balance by $123.01 and raised my strike by $2.50 (or $500.00 based on my 200 shares I’m long). I rarely do this, but decided FCX is worth holding longer term and with such rich premiums I thought the risk wasn’t so bad.
I haven’t rolled my DRYS calls, they are still $0.40 out of the money. My CELG calls are a little more than $5.00 out of the money. DRYS could move either direction by $2.00 any day, so I’m letting it ride as long as possible. CELG can move big too, but I don’t think it’ll break $55.00 tomorrow. My only January naked put remaining is on AAPL and I’ve already sold February calls on the stocks I’ll soon be assigned. That assignment will move me to about $200 on margin, but will be selling new options either tomorrow or Monday to get me back off margin, so I’m not really giving it any thought more than noting it here.
Comment by mule65
You could have gotten a better net credit using a Spread Order and paid only one commission with AMTD:
BTC FCXAX Jan 22.5 ask $1.47
STO FCXBE Feb 25.0 bid $2.43
Order Type: Net Credit $0.96
Comment by Alex Fotopoulos
Thanks Mule. I forgot they’d only charge one commission. I haven’t done a net spread before. I’ll try to remember next time around. Seems to make more sense.
The difference with your example shows bids and asks that wouldn’t have worked at the time though. I get your point and understand I could have done better and save commissions. I’d also not have lost the 30 cents in stock value difference while I played with it. I think I could’ve sold the Feb calls for 2.55 if I had sold a market order immediately.
Comment by Trading Scared
If you sell more calls, do it Friday, not Tuesday. The market is closed on Monday. You will gain 3 days of Positive Theta or in other words Time Decay. I love making money when the market is closed.