With the chances of a quick recovery even farther away now, I sold some calls this morning. I started with NYX since I still own 100 shares and then moved to FWLT which didn’t hold support at a couple of points.
My current calls on NYX are for March 80. With NYX trading under 60 and only 6 1/2 trading days left, I didn’t feel it was a risk to sell another call naked. Essentially the new call is my covered call and the other one that’s about to expire is the naked one in my mind. I sold one April 60 call (NYXDL) and received $279.25 after commissions.
FWLT has been getting hammered since soon after I got in. I made the mistake of selling the second naked put before it really stopped falling. I sold three April 70 (UFBDN) and received $167.75 after commissions. Those three calls help take the sting out of my two April 65 puts and brings my current delta on the position to 82.80, still heavily weighted to the bullish side since my puts are in the money. I thought about selling April 65 calls to give me a bigger boost, but didn’t think the risk was worth it. At April 70, I stand to win on both. It’s the same plan I’m working on VIP. Both FWLT and VIP can jump a few bucks per day, so for both I didn’t want to sell the calls too close to the money.
I was tempted to sell new calls on NVDA this morning, but didn’t and now it’s up $0.77 which is very good for my 800 shares.
I sold the Apr 20 NVDA calls to get out even or lower my cost basis.
Did you sell them early today or late, ie when it was down or up? NVDA made my day today adding $944 back on paper. I’m tempted to buy my calls back on it to try to make more on it, but I know I should let it go if it goes above 20 and 22.50, my strikes.
Did you notice I sold my FWLT and NYX calls near the bottom? At least I sold FWLT far OTM. If I see NYX going farther north I might sell another naked put at 60. That’ll bring my avg cost way down if assigned.
Why not roll the almost dead NVDA 22.50’s to April 20.00?
I sold them during the middle of the day so I got some of the gain but not all of it. I know how you feel, I sold a bunch of calls yesterday that were near the bottom.
Rolling the Mar 22.50 Put to an Apr 20.00 Put is the same as writing a Apr 20 call on the stock. Rolling requires two trades while selling a call requires an option assignment (so rolling is a little bit cheaper). However, rolling forces me to eat one additional bid-ask spread so I sold the call. As far as I know, when I do a rollout on Ameritrade, they do not get me the midpoint between bid and ask. On the other hand, when I sell the call, I split the bid-ask and put my order right in the middle.
Either way, getting out while the getting is good.
Another bonus is that this gives me an month more on the holding period and will get me to LT cap gains faster if I hold NVDA for a while.
Rolling the Mar 22.50 to Apr 20.00 is the same as taking assignment and selling the Apr 20.00 call. Single leg trades execute better (i.e. I can split the bid-ask). Correct me if I am wrong but I think both are very close. I usually roll the put though.
“Almost dead” on NVDA is a broad statement. With six more trading days left, it could climb above 22.50 still. I’ll be happy to take more gain from today’s price if it does.
I’m becoming less and less of a fan of covered calls (I need a longer post for this). Basically the ups and downs of the underlying create more volatility within my portfolio than I like. I’m ready to be done with NVDA for a little while.
I meant the premiums on NVDA Mar 22.5 calls are almost dead. Ask is 0.10 so there isn’t much to be made holding them for another week.
True, but I’d rather save that $40 (4 contracts) + commissions than mess with that now, especially with NVDA back under $19 this morning. I see the point that I could take in more premiums a week early, but almost never roll my options. I don’t know that I’d make that much more rather than waiting it out and letting it expire worthless though.
My model says that rolling now vs. writing at expiration is pretty much the same if the price stays the same. If the price goes up but doesn’t hit 22.50, writing after expiration is much better.
That’s the side I’m on. It all comes down to a bet on if you think the underlying will climb any more. I see us at a short-term turning point and expect a better week next week. Options expiration can make all of that uncertain though.