Sold Covered Calls on CELG & FCX – Dumped AA, CHK, CMI

While CELG was trading at $53.33 I sold two CELG January 55 covered calls (LQHAK) for $2.20 each and received $428.50 after commissions.  I think CELG will bounce back from it’s current price, but I’m not so sure that I don’t want to get some early profit in my account now rather than risk me being wrong.  CELG closed down from where I sold my calls, so I’m glad I sold them when I did, but wish I had done it on Friday before it dropped so much at the open today.  I was hoping for a bounce today and got the opposite. 

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While FCX was trading at $21.63, down $1.70 from Friday’s close, I sold two January 22.50 covered calls (FCXAX)for $1.76 each and received $340.50 after commissions.  I almost sold the in the money (ITM) calls, but decided I’d leave a little extra room for growth in the stock.  I’d have made an extra $1.25 in premium, but would have lost $1.63 in stock value.  That difference wasn’t worth the increased chance for profit to me.  This is the same as CELG, I should’ve made the trade on Friday afternoon instead of risking the drop today that I got.

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I sold my 200 CHK Shares for $15.21 and received $3,032.19 after commissions.  I originally paid $12,019.99 from an option assignment in August.  That give me the realized loss of more than $3,000 I needed before the end of the year to offset my realized gains I’ve taken in from all of the options that I’ve sold throughout the year that have expired worthless.  CHK closed slightly above my exit price at the end of the day.  I’m planning to get back in to CHK eventually, but think it has some more downside risk left in it.  The chart showed that it was coming to a triangle and the way I drew the trend lines I saw that it was breaking south.  If I’m wrong, it could be ready for another good run north.  Either way, I don’t see it staying flat for long.  Buying calls on this one could be a good play.  I should’ve bought puts instead of selling my shares maybe.  That would’ve left me with the upside potential while protecting me from downside risk.

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Aloca (AA) was on my list to consider selling outright or selling new covered calls on.  I paused at the open when I saw it up, but then was busy working when it started to fall.  It made it down to $9.04 before I got my sell order in.   I sold my 400 AA shares at 9.041 and received $3,606.38 after commissions.  AA closed at 9.23 at the end of today.  Moody’s has placed Alcoa’s ratings under review for possible downgrade. 

My 400 shares made their way into my account from two poorly placed naked put trades.  The first lot was assigned on July 21st when I bought 200 for $40 and paid $8,019.99.  The second lot was assigned on September 22nd at the $30 strike when I paid $6,019.99.

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From Friday’s option expiration, my sold my 200 CMI shares when they were called away at the $25.00 strike and I received $4,979.98 after commissions.  CMI dropped $1.66 today, so I’m glad to be out already.  This trade, combined with the above trades, moved me away from being on margin to having a cash balance of $5,226.98.  I’ll use that cash balance to start writing naked puts again and trying to grow my account back through selling time value, not as much from stock price growth.