It’s been more than 30 days since I took my loss on NVDA. That allows me to avoid the wash rule and get back in to trying to pull out a profit on it. If I had gotten right back into NVDA within 30 days after I sold it, I could not have written off my losses on the shares for tax purposes. Since I sold my shares for 20 and 22.50 over a month ago NVDA climbed even higher, but now is falling again.
This morning, while NVDA was trading at 19.16, my limit order hit and I sold four NVDA August 17.50 naked puts (UVATT) and received $347.00 after commissions. Two days ago I mentioned that I was eyeing NVDA again. I wanted to see it down some more before I got in. It went up instead and I started to chase it and even lowered my limit order. When I saw the futures were down this morning I raised my limit and soon after 10:00 am it hit. If these four hundred shares are assigned it will be for $5.00 less than I sold my last lot of 400 shares. That’s a potential $2000 savings from sale price to buy price and I’ll have received option premiums on each side making the move even better. This is a clear example of how selling options reduces risk.
If today would have been another positive day for the market, I might have reduced my order to two options and sold at the money for the 20 strike like I did with CELG yesterday. Instead I get to keep my chances of an option assignment lower and chances of a profit higher.
I’m still trying to stay cautious to an extent, but to get this kind of premium with the stock trading approximately 20% above the strike is hard to pass up. My next trade might be another naked put on VIP. I’m long 200 shares now and already sold covered calls on those shares at the 30 strike. I have a limit order for naked puts at the same expiration and strike. If I do make that trade it’ll be somewhat of a dollar cost averaging type move on a stock I think will recover.