Covered DRYS Naked Put and Sold BA Calls

I sold a naked put on DRYS a few days ago while it was fallen from a limit order I placed 10 days earlier.  Since then DRYS’ fall hasn’t slowed much.  This morning, before 10:00 am, it was down another $5.  Although this is still above my strike I realized what I should have done earlier.  DYRS moves in big moves up and down, but rarely stays flat.  With that in mind I should’ve known to cover my naked put sooner.  This most recent $5+ fall finally made me react.  While DRYS was trading at 72.30, I BOUGHT one June 70 put (DQRRN) to cover my DRYS July 70 put.  I paid $270.74 with commissions.

This option is at the same strike as my first one, but expires a month sooner – seven days from now.  My theory is that if DRYS continues to fall deeper into its trading range it will most likely do a lot of the falling within the next week or so.  (I really should’ve bought this put two days ago.)  If it does fall more, I’ll sell the newest put for a profit and hold the first put in hopes of DRYS making a come back to the higher side of its trading range.  This move is the equivalent of shorting the stock to make my naked put a covered put, but only for seven days and then it’s a naked put again.  If both contracts expired worthless, I’d lose a little money.  I opted to cut my chances for bigger losses in the near term for only $270.  If DRYS turns bullish again, I’ll likely add to my July 70 naked put with one more short sell.

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While all that was going on, an order I entered on Boeing (BA) six days ago hit.  While BA was trading at 76.01 I sold three BA July 85 naked calls (BAGQ) and received $167.74 after commissions.  I’ve traded on BA a number of times and have watched its most recent downfall with interest.  I’m long 400 shares in my IRA, with covered calls on all 400 shares.  I bought those shares in a couple of different lots ranging from $83.00 – 85.00 and all the covered calls are at 85 strikes. 

I think BA could recover some, but not enough to give me a loss on these new naked call options in my taxable account.  The only way for that to happen would be for the overall economy to change directions dramatically.  If that happened I’d be making enough money on the rest of my positions that a small hit on these short BA options wouldn’t matter much.  I’m not saying I’m looking for a loss, but when I look at the probabilities of BA returning to above $85 in the next 5 1/2 weeks I don’t think it’s likely.  Worst case, BA heads all the way back up above $85 soon and I make $4k in my IRA while I break even in my taxable account.