I had three options expire today. Two of the three options will be assigned and one finished with a full profit. My one SPY September $215 put finished deep in the money, as did my one MDY September $280 put. My paper loss on these two puts was reduced more than a third by my 10 TLT September $124 naked calls that expired worthless and gave me a realized gain of $915.76.
I’m not sure there’s a lot of upside left in the market in the near-term. At the same time, I still don’t expect a bear market to hit us soon either. We seem stuck in a rut and even the Fed doesn’t think the economy is stable enough to raise rates. My overall account balance is close to its peak for the year and I’m starting to think I should shave some risk from my account. Rather than simply sell everything, I might do better by selling at the money or slightly out of the money covered calls on my long shares that I’ve been assigned.
After today, I’ll be long 100 shares of DIS, 300 shares of IWM, 100 shares of SPY and 100 shares of MDY. Selling at the money calls could lock in some profit, but wouldn’t eliminate my downside risk. I’d just take the first few percentage points of loss away. I’d also cut my upside potential if we do get a rally. That might be OK. I’m having a good year so far, especially considering where the markets are for the year to date. If I could push up to $114,000 by the end of the year, I think I’d be satisfied with another year of good profits. This goal doesn’t even include further gains from more TLT naked calls, if I can sell more for nice premiums.
I’m planning to wait until Monday or Tuesday to sell any covered calls on my long positions and new naked calls on TLT. I’d like to see stocks recover from today (I’m writing this before noon on Friday since I’ll be away from my desk the rest of the day.) If stocks don’t recover, TLT will likely move higher which will set me up for better premiums on my naked calls. Either way, I don’t think waiting a day or two will hurt me much, other than losing a few cents in time value.