Adobe (ADBE) bounced off its rising trend line of higher lows yesterday and had a great finish to the day. I have 200 shares in my IRA and had a limit in to sell two new covered calls on it for November 42.50 (AEQKV) that hit and I received $388.50 after commissions. I made the mistake of buying back my September calls early when I put a limit in for what I thought would be a small dip. Instead it was a bigger dip and after I took a $100+ profit on the calls ADBE continued to fall to below the strike. I could have saved my cash and not bought the calls back. I watched the stock and wondered if I should get out, but decided it was still only going to be a temporary dip. I was right and now it’s back up and I’ve sold two good covered calls at-the-money.
ADBE topped out around 44.50 recently. It it does that again I will have timed the net profit of my calls to equal the profit I would have had if I hadn’t sold the options, but with a stronger likelyhood of profit. The other way to look at this series of trades is that my net cost of buying ADBE in my IRA is now around 40.25 per share (100 profit from my first CCs + 388 on these new calls, divide that total by 200 and subtract it from my original buying price of 42.66 and you see my cost dropping while I am still obligated to sell my shares at 42.50 by November 16th)
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