fuzzballl 11:24 am on Friday, June 22, 2018
Tags: LEAPS ( 418 ), LongCalls ( 495 )

TQQQ

#LongCalls #LEAPS – This thing is right up near all time highs and my short calls are (finally) out of trouble. The LEAPS roll up strateegery functioned perfectly here unlocking the profit by getting the short calls out of the way. I’ll take the weekend to decide what to do next….might jump right back in!…LOL

Part of the reason to close this is I had a wild price set to sell the LEAPS (about 75 cents above the mid) and it got filled so closed the short calls that were right ATM.

Sold to Close TQQQ JAN 17 2020 60.0 Calls
Bought to Close TQQQ JUN 22 2018 61.5 Calls

All said and done booking 2.40 per contract on a 10 lot. That’s the second round trip in this thing. Yearly gains pushing 6.00 in the ticker. It’s a fun one!

jsd501 11:53 am on Friday, June 22, 2018

I am going to stay with my positions since we have 82 more weeks to go and keep rolling as much as possible to get a better strike price and premium if possible.
- fuzzballl 11:56 am on Friday, June 22, 2018
  
  Sounds good. I was happy to be out since weekly calls had been a pain. I will definitely reset and probably use a 10×6 or 10×7 ratio as time goes by.
jsd501 12:06 pm on Friday, June 22, 2018

Here is how I am looking at these trades. If I buy the 2020 leaps on TQQQ 60 calls @ 16.00 which is about the middle with 82 weeks to go to expiration, and I can earn 16.00 in premium to pay for that trade, I break even. But if I sell further out of the money calls and the stock goes up by 10 points I could book $10,000 on 10 contracts. If by chance it goes up by 50 points, I could book $50,000 on a 10 lot. Looking at the range on this ETF it could get there in weeks or a few months. So as long as I know I can cover my cost by the expiration date I could make a bunch. If it goes down, I keep selling calls to cover my weekly cost and think I can break even on the trade because of the great premiums and volatility.
- fuzzballl 12:07 pm on Friday, June 22, 2018
  
  You’re preaching to the choir…LOL I totally agree!
- fuzzballl 12:15 pm on Friday, June 22, 2018
  
  The biggest gotcha that I see in these types of trades (and I’m willing to live with the risk) is the stock tanking to waaaaay below the LEAP strike. At that point we’ll be selling weekly calls way below our basis. Then…if the stock magically rebounds the whipsaw will cause the weeklies to be losing more than the LEAPS are gaining back. This risk is even more critical later in the trade.
  
  To offset this:
  
  1. sell spreads in that situation
  2. sell very small and way less contracts…just enough to cover the B/E
  3. plan on possibly rolling into the next LEAP and continuing the trade
  
  I’ve been there done that and got the (REGN) t-shirt. 🙂 🙂
  - fuzzballl 12:21 pm on Friday, June 22, 2018
    
    Also, that’s why I’ve let my CELG experiment in July run it’s entire course. Experimenting with selling against a worthless LEAP that’s 20 to 30 percent above the stock and has no chance of gaining any value. It’s interesting knowing that the weekly sales are basically stand alone trades with no help from above.
    
    On the bright side, if the stock does start to rally it might be a good time to setup a brand new position since it’s poised to rebound from a yuuuge bottom.
    - jsd501 12:39 pm on Friday, June 22, 2018
      
      I agree but I am going to stick with the indexes to avoid the risk of a company going out of business and also stick with the triple indexes because of the premiums.