I’ve been sitting on my 300 shares of Joy Global (JOYG) for a while without the heart to sell covered calls for a low premium while it looked too “cheap” to get out of. After charting it earlier this morning I saw the trading channel it was trading in and decided I might have found a good exit price at the $25.00 strike.
While JOYG was trading at $24.05 I sold three April 25 covered calls (JQYDZ) at $1.35 each and received $392.75 after commissions. JOYG might be able to break out of this trading channel, but I think this bear market rally has been really good for JOYG already and I don’t want to try to get more out of the stock out of greed. The options expire in three weeks from tomorrow. If it’s assigned and I’m forced to sell my 300 shares it will mean JOYG is up $0.95 from where it is now. That’ll give me another $275 or so after commissions on top of the $390+ I just took in. That would be more than a $650 gain or a 9% gain in three weeks. I can’t pass up that opportunity just because it might go higher. Either way, I just lowered my cost by $1.31 per share.
The other way to look at my selling covered calls now is that I have a couple of bullish put spreads and naked puts in my portfolio and if the market keeps climbing as a whole, I’ll have my profits there too. Eventually this rally is going to take a breather and dip. Before that happens I want to have some premiums in my account from out of the money calls. So far this week I’ve taken in nearly $1,175 in premiums and still plan to sell covered calls on TDW at some point.
