Today’s option expiration was easy. It wasn’t fun, but was certainly easy since I didn’t have to do anything outside of see my balance drop again. I thought my SPY covered call might get assigned by the end of the week, but it didn’t. I had one of my clients in the same position and his SPY December $203 covered calls were assigned. That’s a good thing considering that SPY fell to $200.02 at the close and he got out with a profit before trading started today. The bad part is that I didn’t luck out with him. My one SPY December $203 covered call expired worthless and I’ll hold onto my 100 shares of SPY, for now. I’ll have a realized gain of $362.27 from this call on top of SPY gaining $1.36.
MDY wasn’t close to being assigned. In fact, the mid-cap ETF is down $7.79 from where it was when I sold the covered call. It rallied in between when I sold this covered call and today, but didn’t climb above my strike at any point. My one MDY December $270 covered call expired worthless and I’ll keep my 100 shares of MDY. I’ll have a realized gain of $229.75 from this call, which helps to cut the pain from the loss of value, but not enough to cover it all.
I am glad that I sold these covered calls since I pocketed an extra $592.02 that I wouldn’t have had if I was a buy and hold investor. Even with the premiums I received from the original puts and these calls, I’m still sitting on a paper loss on the shares. I’ve been thinking about selling new covered calls on SPY and MDY, but I need to sell something to take my profits off the table for the year. The decision might be if I want to take the loss this year or next year. I’m not sure if I’ll keep both (or either) of these ETFs going far into January.
For now, I think the past two days of selling have been overdone and I expect a bit of recovery before the end of the year. The technical indicators don’t signal a big rebound is due, but at the least, I think SPY will retest its 100-day moving average, currently at $203.14 and falling. I might try to get out of SPY on any bounce. MDY is so far beneath its longer-term moving averages that I’m going to have to see how next week unfolds before making a decision.