fuzzballl 9:04 am on Wednesday, November 23, 2016
Tags: IRA ( 431 ), ShortCalls ( 979 )

GOOGL

#ShortCalls Bought to Close GOOGL NOV 25 2016 795.0 Call @ .13 (sold for 2.25)

Sold GOOGL DEC 2 2016 792.5 Call @ 2.63

k8e8n8t8 9:09 am on Wednesday, November 23, 2016

Are these naked calls or covered calls you are selling?
- fuzzballl 9:16 am on Wednesday, November 23, 2016
  
  Think I posted the original trade a couple weeks ago…hang on…I’ll see if I can find it and re-post.
  - fuzzballl 9:18 am on Wednesday, November 23, 2016
    
    Here ya go…
    
    GOOGL 2019 trade
    The long term “Whiz” trade on GS worked so nicely, (would’ve been much better with a gradual increase!) I’m adding another one on GOOGL. Placed similar trade on AMZN after the earnings drop… #IRA
    
    Bought to Open GOOGL JAN 18 2019 650.0 Call @ 195.00
    Sold GOOGL JAN 18 2019 500.0/400.0 Bull put spread @ 12.00
    
    And every week for the next 113 weeks (unless it’s screaming higher):
    
    Sold GOOGL NOV 18 2016 790.0 Call @ 2.70
    
    Whiz uses the delta 80 call so that it trades nearly like the stock. I went with delta 75 to reduce the up front cost a little. He uses Leaps to negate any theta issues. Have to imagine the entire trade as just writing a covered call every week but only putting out 18 grand for 100 shares.
    
    For downside protection he usually buys a put 20 percent below the current stock price. I prefer selling a put spread to reduce up front cost. The most I can possibly lose is the cost of the Leap call and the width of the bull put spread….that’s only going to happen if I wake up tomorrow and GOOGL is at zero. If that happens this trade will probably be the least of my worries!
    
    Here’s the numbers I’m really watching:
    
    Initial cost of 2019 position = $18,300
    Weekly call premium @ 300/wk = $34,200
    
    So if stock goes nowhere it’s still about a 40 percent annualized gain. I’m not planning on holding it until expiration though. I’ll probably trade the Leap like stock. Sell it at resistance and buy it back on drops but in the meantime every weekly that gets sold is lowering the basis.
jsd501 9:18 am on Wednesday, November 23, 2016

I was tempted to take the same trade but I want to see how this works out in a correction. If there is one GOOGL could drop a long way quickly.
- fuzzballl 9:24 am on Wednesday, November 23, 2016
  
  Yes it could…that’s always a risk. I could place a stop on it equal to weekly premium received or maybe buy a few puts every month or two a couple hundred bucks out of the money. Still considering that. Just have to trust in the fact that it’s a long term trade and gradually reducing basis week after week will work out.
  
  In a strange way a selloff doesn’t sound like the end of the world. By rolling calls down along with the drop you could really rack up some serious premium and cash in on the recovery as well as maybe add a second position.
  - jsd501 9:28 am on Wednesday, November 23, 2016
    
    Yes, I was thinking of selling a put at the 650 level to double down on a correction.

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