My biggest bullish move of the day was not selling covered calls on any of my long shares today. For years, that’s been my typical move the first trading day after options expiration, but I’m staying patient on these as long as I can. I’m basing this patience on the charts, so we’ll see how I do. I’m not 100% passively bullish though. While I’m still long (without covered calls) on CSX, JPM, SSO and UWM, I covered my AFL, VNQ and QCOM shares too soon. My DSX covered calls seemed to be timed well (finally).
For trades today I closed my SH position and reopened my BA exposure that just expired on Friday. I sold 150 shares of SH at $41.44287 and received $6,215.68. I took a loss on these shares of about $1,053, but had them as a hedge for my long positions that made a lot more (on paper) during the same period. I should’ve closed this position earlier, but wanted to hold it through the weekend in case anything happened in Europe to piss off the markets. Nothing big happened, the rally continued and I exited.
Boeing has earning coming out in a couple of days and the premiums are juiced a little extra because of that. I’m not expecting any bad news and thought I should get back in while volatility is still up. While BA was trading at $64.49 I sold one BA December $60 naked put for $$1.89 and received $188.65 after commissions. I thought about waiting for a dip since BA is hitting resistance at its trend line of lower highs. The price could easily come down a bit and I could have gotten a better premium, but I don’t see it as a big risk with a $4.49 cushion before BA even gets down to the strike. If it does get that low I think it’ll find support again and I might end up selling another put. I’m only looking at this as a half position for now. Actually the $61.50 area looks like it could work for support too if BA even gets that low again any time soon. I didn’t need to take on additional risk and go any higher with the strike because I’m already targeting a potential return of 3.25% on this trade over slightly less than two months or 21.1% annualized. That’s the kind of trade I like when I’m already fully invested. The downside seems limited; I have a good cushion before it turns into a loss; and the potential annualized return is more than 20%.
If the rally continues I’ll add more exposure soon. Although, if I do sell more naked puts, I’ll probably start covering more of my long shares with covered calls to bring my average cost per share down some more.
Did you see NFLX after hours??? 😀
I saw that. I was looking at making another bear trade on them yesterday, but wanted a bump up first. I should’ve taken the risk. NFLX is doomed. They broke their model by choice. Best case scenario is that the remaining subscribers don’t leave completely, but only cut one of their subscriptions. NFLX is begging subscribers to choose which way to cut their subscription rates. I don’t get it. The question is whether or not to short it again today or wait until later this week.
I’ve re-entered an old position of mine that has dropped significantly during the last 3 months. I believe the drop is overdone and the Premiums are too good to ignore.
I sold 2 ACOM November 20 Naked Puts at $1 each. Obviously, this is going to be a pretty risky trade with earnings after the bell today. However, there’s only 3.5 weeks until expiration and I’ve got almost 19% downside protection. If all goes well, I could be closing this position tomorrow. Otherwise, I’ll own 200 shares at the lowest they’ve been since last summer.