I’ve always stepped in and out of each leg of options one trade at a time. Today I used what TD Ameritrade calls a “complex option” trade, a net credit spread rollout, on DRYS and saved one leg of commissions. Thanks to the comment yesterday by Mule65 regarding my FCX option rollout I learned. I liked trying to get every penny from each leg by selling with limit orders and getting the high for what I sell and the low for what I buy, but that doesn’t work every time. Yesterday on FCX I missed a couple of levels of premiums by waiting and I paid commissions for each leg which means I lost potential income twice.
This morning, while DRYS was trading at $14.90 my limit order hit to make the following trades:
I bought to close three DRYS January 15 covered calls (OOCAC) for $0.25 each and paid $87.24 with commissions. I originally took in $227.75 when I sold these calls on January 5th. So, this was a good trade to have made.
At the same time this morning I sold to open three February $17.50 covered calls (OOCBW) for $1.60 each and received $477.24 with commissions on each option contract only. That’s only $0.75 for each contract since the per trade commission was covered by the first trade above.
I netted a $390.00 credit on this spread trade and now that I’ve come back to look after closing the latter trade (OOCBW) closed at a bid/ask of 1.20/1.25. This shows me I made the right move in selling earlier in the day. This gain pulls me above a $9,000 cash balance which means I won’t be on margin at all with my AAPL January 90 naked put assignment this weekend. My CELG January 55 covered calls finished out of the money, so I’ll be re-writing those next week.