I was surprised when I downloaded my past few days account activity this morning. While I was only expecting dividends to trickle in I saw that my INTC November 19 covered calls were assigned on Tuesday. I sold 300 shares of INTC at $19 and took a realized loss of around $600 after discounting the premiums and dividends I took in. I was patient with INTC for a while, but gave in about a month too early as INTC came back to life.
I spent a decent amount of time reviewing my account positions yesterday and deciding on my next steps since we didn’t get the sell on the news reaction this week I was expecting (although that could change with tomorrow’s jobs data). The obvious conclusion was that I’m not set up with the best allocation right now. I’d do great in a quick sell off since so many of my position have a good cushion and I have a good sized position in VXX, but without that happening yet I’m not taking part in much of the rally. The easy answer was to add more exposure.
I have more than a 13% cushion on my IWN position and figured I could add some more small cap exposure so I turned to its more liquid sister ETF, IWM. While IWM was trading at $72.95 I sold one IWM December 72 naked put for $2.05 and received $203.99 after commissions. I really debated going in the money and selling the December 73 put, but decided not to get greedy on a day that was already up big.
I plan to continue to add a little every day or two as my November put positions get farther out of the money and my call positions get deeper in the money. I might roll some of these early or just close them, but probably not unless I see the market starting to roll over. Most likely I’ll choose other positions and for now am mostly eyeing ETFs over individual stocks. I haven’t lost sight that November expiration isn’t here yet and a lot can happen over then next two weeks. That’s another reason I kept my new IWM naked put out of the money. If I’m going to continue to set myself up for potential margin I don’t have to sell in the money to have a good year, not counting VXX. VXX will have its day again and if not I can’t lose more than $9,000 from here.
I read a few places that VXX is reverse splitting 1:4 on Nov 8th.
Thanks Mule. Here’s the link from Barclays for anyone else who is interested:
http://www.ipathetn.com/pdf/VXX_reverse_split_press_release.pdf
For those not familiar with splits (or reverse splits), this does not change the value of your holdings. In this case, the market value of the shares will be the same, but with a smaller number of shares. Personally, I don’t see what they gain by doing this reverse split outside of a possible psychological appeal to some who view the higer price appealing. I liked the cheaper prices so when it got below $8 I could add 100 share lots cheaper.