jefflsmith 6:58 am on Thursday, October 22, 2020
Tags: CoveredCalls ( 2,200 ), Fuzzy ( 414 )

Adjusting ABT Covered Call following earnings announcement…..logic and action taken

Adjusting ABT Covered Call in reaction to announcement of good quarterly earnings and raised guidance…..and stock drops $2…..

#coveredcalls, #fuzzy

fuzzballl 7:26 am on Thursday, October 22, 2020

Looks like you’re getting the bounce. Nice! Hope you don’t mind if I throw a few CC questions your way. My worst trades this year have been covered calls that have gotten run over by a massive rally in the stock so was wondering how you manage in certain situations.

1. If the stock implodes will you sell the calls below your basis or wait? That’s where I’ve gotten in trouble.

2. Also it looks like you always close the calls even at losses and sell new. How do you handle a whipsaw in the stock price? Knowing my luck, as soon as I roll the calls up for a big debit the stock reverses and I take losses on both sides.

Thanks for posting. I definitely need to improve my handling of covered call sales. Patience would probably be what I need the most. LOL. I tend to sell my puts to acquire stock at good levels and then I forget that’s the whole point. Then sell the calls too soon and miss out on the recovery.
- winstonthink 7:34 am on Thursday, October 22, 2020
  
  But @fuzzballl, did you not develop the #fuzzy for exactly that reason – it’s much more cash-efficient than a CC. And I thought you had an idea to sell puts (synthetic covered call) instead of calls to also avoid the runover issue?
  - fuzzballl 8:01 am on Thursday, October 22, 2020
    
    I’ve tried a lot of different stuff over the years. Had the same issue with the fuzzy getting run over with the short calls. One thing that I haven’t done is roll up the short calls for a debit. That seems to work great for @jefflsmith but I hesitate due to whipsaw possibility. I always wait for the stock to pull back to roll the calls and it never seems to happen just getting deeper ITM.
    
    Apparently stocks do only go up! LOL
    
    I think my best bet to get really directional with a position would be to sell DITM puts on a pullback. Just seems to fit my mentality better.
  - fuzzballl 8:10 am on Thursday, October 22, 2020
    
    On another note…it was about two years ago I decided to just get back to basics and go with a predominately “sell put acquire stock sell call” strategy. It’s worked great and has been nicely profitable but I have missed out on some really big gains with the call selling. I’m never patient enough….chances are if I got the stock assigned it’s on a big drop. Need to sit on my hands at that point for a few weeks! Uugh..
- thomberg1201 8:11 am on Thursday, October 22, 2020
  
  Good question, I’ve had a similar problem