Jeff 8:20 am on Thursday, September 13, 2018
Tags: CoveredCallCampaign ( 132 )

SQ covered calls

#CoveredCallCampaign This one has been a monster, and call premium is big. Got some of my calls run over so building my way back. I am long stock and also long Jan 2019 60 calls.

Sold $SQ Oct 5th 97 calls for 2.45.

Anyone have advice on rolling my Jan 60 calls? I can go to March or Jan 2020. Currently trading at 32.83. Can roll up to Jan 2020 80 call for 26.20, or Jan 2020 100 call for 17.40.

Thoughts?

hcgdavis 11:14 am on Thursday, September 13, 2018

Either one of those would be huge premium but then you have to wait a long time. If you already have a profit, close the entire trade (buy back the calls and sell the stock at the gain) and then reset.

I used to try to extend duration by selling leaps but if it keeps moving to the upside you end up staying in the trade a long time for not much decay. I personally have found better to reset or take the profit and move on.
- hcgdavis 11:14 am on Thursday, September 13, 2018
  
  Better to use the $ on weekly or monthly trades if you are going for income.
  - Jeff 11:19 am on Thursday, September 13, 2018
    
    I look at it like staying long the stock, and generating income from short-term call sales. I’m long the LEAP call, so I don’t need decay, just profit as the stock goes up. Then I generate income and reduce cost basis by the stock’s continued rise.
    
    This is all found money as I bought the calls for average of 3.26 awhile ago. So the idea of rolling now is to lock in some profit and keep making more with a combination of continued stock rise and synthetic covered calls.
    
    I’m wondering if anyone has calculated best way to roll ITM calls up and out.
    - fuzzballl 11:22 am on Thursday, September 13, 2018
      
      If the position is not ratio’d (or even if it is) I’ll sometimes roll up the LEAPS and take the cash to roll up the ITM calls. Then…it’s easier to roll the ITM calls again later. This still preserves the current profit in the position that you can book once the short calls get out of danger.
      
      Risk to this is a big selloff right after the roll up…
      - Jeff 11:23 am on Thursday, September 13, 2018
        
        At what point do you roll the long LEAPs if you are NOT dealing with ITM short calls?
        
        fuzzballl 11:31 am on Thursday, September 13, 2018
        
        Not sure I’ve ever been in that position. Seems like I always have some short calls. If the stock is up near resistance and I can book a nice winner I will.
        
        In the case of SQ it would be hard not to roll them up a little after a run like it’s had. As far as how far up or where to roll I’m not sure what the best option is. Maybe roll up half and just book the winners on the other half.
    - hcgdavis 11:42 am on Thursday, September 13, 2018
      
      From the short side like a cc or diagonal that is deep ITM on the short side, I think TT did a segment on this but I can’t find it. Anyway, they found selling 45 DTE for the shorts then rolling them every 3 weeks or 21-22 days kept the decay the highest. Once deep ITM even an option 3 weeks out will behave like stock.
      
      If you only have long calls and have that much of a profit, I personally would roll them up to ATM. Book profit, probably cover the cost of the new options then you still have a lottery ticket to keep running or start selling calls against it for income.
      
      You win either way:)

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