I wrote this yesterday, Tuesday, January 22nd. I thought I published it and apparently only hit save. Anyway, here’s a post from yesterday with already dated info.
At the end of lunch today, MOT was trading back and forth over 12.00. I bit the bullet and sold an at-the-money group of covered calls. While MOT was at 12.06, my order hit and I sold five March 12 covered calls (MOTCN) and received $411.25. Of course all the waiting I’ve done on MOT was ill timed (understatement) and today proved to give me more of it. MOT finished up from where I traded, but I still think I made the right move. I need to get out of such a dog of a stock and at $0.85 per option I got a good return based on where MOT is now.
That’s the thing I have to stick with, not where my stocks were, but where they are now. I say that often and it works over the longer term. Bite the bullet and take a loss to improve your account value. If MOT stays flat or goes up, I’m going to have an extra $411 that I might not have had if I didn’t sell the covered calls. MOT could recover, but if it stays flat or drops, I’m ahead of where I would have been.
I also sold five Shutterfly (SFLY) March 22.50 naked calls (QFYCX) and received $486.25 after commissions. I’m taking a risk by shorting anything, but think my cushion should be enough. I don’t see SFLY taking off to new highs, so I’ll try to ride this out if it breaks above my strike. Selling calls hasn’t been my main trading plan for the higher risk associated with it, but the risk of selling puts hasn’t been good lately either. I’m trying to get out of the rut of thinking I need only sell one side. I’ve eased into it more over the past few months and now I’m increasing my size of trade.
I should have changed my strategy earlier to sell more calls than puts, but I didn’t, so that’s just spilled milk now. I’ll clean up and move on. No need to cry about it. I ended the day down $2100+. I would have been really pissed if I had lost over $6500 as I started the day doing. I can handle $2100 (again).
I collected $2,246.49 in new premiums today. All of that can end up being a profit in a month or two, but likely some won’t. Hopefully I can return to the days where the good outweighs the bad. I feel this capitulation today could be just what we needed, along with the 75 point basis cut from the Fed, finally.