Sold Extra AA Calls

While AA was trading at $9.36 this morning I sold four AA November 12.50 calls (AAKA) at $0.36 and received $131.00 after commissions.  My cost is much much higher than this strike, but I’m willing to get out of AA at $12.50 if it happens to rally in the next three weeks before options expiration.  I started with a limit order for the $10 strike, but raised it to the $12.50 in hopes AA comes back to life a little. 

I have a weird situation brewing in my account.  I have a realized profit for the year so far.  I have big paper losses on a few stocks and haven’t closed anything for a large realized loss, but have been writing tons of options that have given me realized gains.  I will be forced to sell something for a loss this year to get a tax write off for my mistakes.  AA is my first pick for the short term.  I’m giving myself room for a little rally, but not so much that I don’t get a little extra profit while I can.  If AA can rally more than 30% it’ll probably be good selling opportunity.  I still have my original covered calls at the November 15 strike and haven’t closed those yet.  I can’t imagine AA coming back 50% in the next three weeks, although stranger things have happened.  If AA can recover 50%, I’ll make enough on my other long positions gaining with options at higher strikes to keep me from being upset about missed opportunity on this one.

I’ve worked my margin balance down to $1,472.32 and will get rid of that completely in a few weeks even if I don’t sell any stocks, just based on selling new options after November expiry.  I’m trying not to sell stocks at the current levels because I think we’ll get another rally before lone, but by the end of December I will sell something even if we’re lower by then.