Exiting Stocks – TDW, USO, QCOM

I should’ve sold USO yesterday afternoon after it was up $4.00+ for the day.  Instead I waited for it to fall some today and I sold 300 USO shares at market at $42.6802 and paid $12,793.99 with commissions.  I’ve been losing big on oil for a while expecting it to flatten out.  I haven’t seen that happen and decided to cut my losses here and move on.  I haven’t taken the time to calculate my total losses with all of the premiums I’ve received since selling the original naked puts.  I lost a sold $6k on the stock itself, but estimate I took in more than $2,500-3,000 in premiums.  Certainly it’s a losing series of trades.

I checked the options on QCOM and didn’t think the premiums were good enough to warrant holding and selling covered calls.  So I sold 200 QCOM shares at market for $31.5801 and received $6,305.99 after commissions.  I sold my last QCOM covered calls a month ago in the money since I expected it to fall and I still liked the stock longer term.  That was a bad move since QCOM fell an extra $8 more than I expected.  Now that it recovered a couple of dollars I opted to get out while I could, without using options again.  Had I not been on margin already, I would’ve considered selling in the money covered calls again.

I decided to take a different route to exit Tidewater, Inc (TDW) and it might not even end up being an exit at options expiration, but I’m positioned for it.  While TDW was trading at 36.67, I sold two December 40 covered calls (TDWLH) at $1.55 and received $298.50 after commissions.  I checked the potential returns I could make selling the $35 strike in the money and the 40 strike out of the money.  I decided to give myself a little more upside potential and went with the $40 strike, half based on the chart.  TDW closed just above its 10 day moving average yesterday and although it dipped below it today, it recovered before long.  I wondered if TDW could head back towards $57.50 where my average cost is (not counting option premiums received so far), but shut that out of my mind because I believe trading decisions shouldn’t be made on where you entered the position, but on where the stocks are now and where you think they can go.  The next hindrance for TDW could be the 20 day moving average which is just below $40 and if that breaks, the 50 day moving average is around $43.  I figured getting $1.55 for selling the $40 strike could put me near the max TDW could hit in the near term.  If TDW’s rally doesn’t have legs at least I got some more cash out of my position and further reduced my cost.  It seemed tentative while sitting on the 10 day moving average and I was in on a selling roll, so I picked the $40 strike.  It moved positive from the time I sold to the time I wrote this, so I’m even happier I went with the $40 strike than the $35.  I’d have been even happier if I had waited to sell the calls for an hour.  I decided to go with the December expiration because the premiums didn’t offer enough of a difference to add a month to it.  Getting the tax loss write-off in December was in the back of my mind too.

These three trades today brought my margin balance down to $8,658.38.  That’s easier to stomach.  I have more covered calls I plan to sell on my other long positions, but now feel like I can be more patient, at least until I see the markets ready to take another break again.  Again today I’m up on all, but one, of my long positions and I hate to cover too early (like I just did on TDW).