I wish there were weekly options on the SOXL. I may take another look at the XBI but liquidity is also important.
I’ve gone through all of my current 2020 LEAPS positions and added another little detail to how I track them. This additional detail will assist me in selling the weekly calls…especially when the stock is trading well below the LEAP and whipsaw risk is at it’s greatest.
I’ve always tracked and updated how much weekly premium I need to average to cover max loss over the duration of the position. Selling that much every week isn’t going to make any profit though. I’ve added another number to my tracking that tells me how much premium I need to average to have max loss covered by Jan 2019. By watching that number, I would be able to have the LEAP cost covered and still have 12 more months to sell. Surprisingly, that number really isn’t that much more which further shows that going out as far in time as possible for these is the way to go.
The profit potential in these is pretty eye opening. These last 2 to 3 weeks of selling have been far and away the most I’ve ever brought in on weekly sales. Once the LEAPS are paid for these sales would be all profit. The May 4th expiration was my all time high bringing in over 15k of realized gains. Not all of that was weekly sales against the LEAPS but a big chunk of it was. Keeping a long term outlook and just gradually plugging away week after week is the key. Duration over direction for these. I’m almost to the point now where I really don’t care where the market goes as long as the VIX stays up where premium stays somewhat elevated. Crazy thing is that these aren’t huge oversized positions. I stay within strict limits on my position sizes but these really add up with 8 or 10 underlyings each brininging in a little every week or two.
Here are all my current 2020’s with updated weekly sales required for both scenarios. My 2019 positions are similar numbers too. If I’m happy with the underlying stock as soon as the 2019’s are completely covered I’ll be looking to add more 2020’s and when the 2020’s are covered I’ll be waiting on the 2021’s to show up and start working to cover them.
First number is required weekly sales to cover max loss by Jan 2020. Second number is to cover max loss by Jan 2019 which leaves another year to sell.