I rolled the dice with BA and waited for it to pull back before tomorrow’s expiration, but it went the other way, but only briefly. I was training an assistant this morning when my trade trigger alert hit my cell phone. I figured she was cool enough not to mind the break from training, so I logged into my account and pulled the trigger on my BA Feb 85 calls. (I think she thought the trading was cooler than my training.) I bought them back for 1.20 per option and paid $241.49 after selling them for $338.50 back on 1/8/08. Obviously I could have made more if I had bought them yesterday or even two hours later, but I didn’t and now I have to be happy with my near $100 gain on naked calls. I own 100 shares still, but they’ll be called away with the Feb 80 covered call I sold. I have other shares in my IRA, so I’m staying away from it for at least a month in this account to avoid the wash rule. I’m taking a loss on the position as a whole of over $1100. I’m not too upset with that considering that I entered the transaction when BA was around 103 I think and should have dumped it the same hour after they announced they would delay their latest and greatest plane.
NVDA is what really broke my winning streak though. Earnings came out yesterday after close. I even listened to some of the call since I was home sick and was bored with TV. They beat Q4 net income at 42 cents vs 27 cents forecast. They also beat Q4 revenue with $1.2 billion vs 878.9 million forecast. It went up some after hours and took a dump on me this morning. It’s down $3.41 right now at 12:23pm. I started by selling four 32.50 puts and then after it tanked I sold four calls at 25 and then four more puts at 25 – all for February expiration. My calls are looking great and cutting my losses by $500+. The 32.50 puts just suck with a paper loss of $3000+. I like NVDA still though, so I’m going to take the assignment and write covered calls on it. My Feb 25 puts are break even right now, so I’ll probably buy them back today or tomorrow to avoid an assignment of another 400 shares of the same stock. I sold them for 1.50 each and have a limit to buy them back at 1.40. (Yes, that’s emotional trading by trying to get a profit in of a few dollars.) NVDA bounces around so much that I expect it to hit today. The way I chart NVDA, the current price should hold as support, but I’m not stupid enough to bank on that for 800 shares, 400 is plenty. I’ll have until Monday to decide at what price I want to sell my covered calls.
I just saw NVDA on my news feed. Wasn’t really paying attention since I am trying to manage some positions on BBBY and AEO. BBBY is at the strike and I am trying to unwind it. I am trying to get out of an AEO covered call (resulting from put assignment and subsequent hedging). I did manage to sell a couple of NVDA Mar 22.5 puts naked at 1.50. Knowing my luck, they are trading 1.60/1.70 now. I am glad I am learning trading discipline and only put on half the size I wanted.
I think that the NVDA March 22.50 is a good move. I say that even after it dropped another $1 from when I posted during my lunch break. That’s $400 I didn’t have to lose after I admitted I was being emotional about the trade. That is just flat out bad and I know better. I’ll see how tomorrow goes and will decide if I’m going to close it out before the end of the day or take the full 800 share assignment. That might be too much for me to take on for one stock. I’d love a rebound tomorrow in NVDA and I also need MRO to stay above 50 to get me out of those shares and free up some cash.
You wrote about not making other trades on BA for awhile to avoid the wash rule because you own other shares. I believe that because these shares and trades are in an IRA you do not need to be concerned with the wash rule. Basically, the wash rule deals with taxable events (mostly losses) and timing thereof. Since there are no taxable events regarding trades within an IRA there is no application of the wash rule.
Disclaimer: I am not an accountant so you will probably want to do some independent research or consult with your tax person. 🙂
Bill, I was referring to my taxable account for that statement. I should have been more clear than just “this account”. I have other shares in my IRA too, but understand taxes don’t apply there. That’s one of the reasons I trade in my taxable account, no capital gains.