Dexcom Covered Call Diagonal $400/$420 Roll

Bizarre market. Friday….Diagonal roll up $20 for a $7.49 credit with the stock at $422. $36.84 of premium……where is this market heading????

CC Strategy/Activity Jul 10

Options added to profitability in 24 of 28 positions. Overall large gains in stock price in DXCM, AMAZ and SDC create a loss on the options. Covered calls most successful in most conservative account (Schwab 401(K)) where they generate almost 50% of the profit.

P/L from stock and option does not always equal net P/L due to contribution from dividends.

Visual Representation of Profit/Loss across 30 Covered Call Positions

The graphs represent the individual covered call positions across three accounts. Positions are tracked over time showing the daily profit/loss for the stock/option and net.

#coveredcalls-2

Assigned on 14 PTON CC’s, 36 New CC’s Jun 12 $45

https://coveredcallswithjeff.wordpress.com/2020/06/08/assigned-on-14-pton-covered-calls-49-days-profit-8492-15-or-119-annualized/

#coveredcalls

Not a great week in IB despite good market

9 of 11 positions making a profit. DXCM made for tough week. Down $21 on Thursday….Down $9 on opening Friday….sold naked $350 calls that were $30 below $380’s. Big bounce….buy $380 calls back then roll up the $350 to $360. Messy and expensive. Stock ended up $19.64 on Friday and I got very little of it!

#coveredcalls-2

New CC’s

  • VIAC 6/19 $24 net $22.14
  • MO 6/19 $41 net $40.05
  • SJR 6/19 $17.50 net $17.18 (pays monthly dividend)

#coveredcalls-2

Assigned on 226 of 336 SDC Jun 5 $7.50 Calls Position +44.7% in 44 Days

Recent run up in stock to $8.66. Details on the CC position established in April are below.

https://coveredcallswithjeff.wordpress.com/2020/06/04/assigned-on-sdc-22600-shares-cc-position-profit-80496-in-44-days-44-7-or-371-annualized/

#coveredcalls-2, #sdc, #assignment

May IB Account

  • 12/12 Positions have cumulative net profit. Source of profit:
    • 4 stock driving profit
    • 4 short options driving profit
    • 4 stock and options driving profit

Overall net profits would be higher with just owning the stock (driven by DXCM and EW). Removing DXCM and EW from the calculation we have $19,000 in profit ($9,004 from stocks, $10,000 from short options).

6 positions assigned. 3 positions expired. 1 Diagonal down.

Moved to the cottage in Canada on Thursday. Issues with internet and couldn’t get trades done to roll positions and avoid assignment/expiration. Managed to get Schwab trades done but ran out of time with IB :(. Love the cottage…..hate the service.

#coveredcalls

Managing DXCM CC Positions

DXCM has been on a wild ride since early March with a low of $182.07 and a high of $428.59. The increase has made it a significant percent of my account. Interesting challenge to manage. Protect on the downside after such a run up and leave some upside. Getting called away will trigger a capital gain that I would prefer to manage over time (make it long term).

In mid May I switched to a “ladder” of strike prices under the stock price to increase the protection. I was not able to protect all of the gain. The stock has dropped $90,775 in value. Options have increased in value by $59,625 for a net loss of $31,510. The position has a profit of $90,305 in 44 days.

The current position is below. 4.8% protection and 2.8% upside. Options are all Jun 19 expiry (monthly only).

Not sure if I have done the right management. If I had known the stock would go on such a run I wouldn’t have sold the calls to start with! Hope this might help someone manage a similar position. Comments/suggestions are welcome.

#dxcm-2, #ccl-covered-call

BOUGHT 3 CC’s May 29 $205 TWLO net $198.49, Stock at $204.50

BOUGHT 5 May 29 CC’s on WORK @ $30.392, Stock at $31.50

TDOC CC May 22 $167.50 net $164.99 w stock at $171.07

SE Covered Call May 22 $70 for net $68.70

#coveredcall $SE

STO SDC May 22 $7.50 @$.30 to re-establish covered call. Stock at $7.32.

WFC CC – Might be some life after all!

Good day yesterday for WFC. Likely have to roll up from May 22 $24.50 to get it back positive but nice to see the change in direction.

#Coveredcalls $WFC

AMZN CC called on weekend. New CC this morning. May 22 $2395 for net $2364

#coveredcalls $AMZN

IB Account Friday

  • CVX – Roll Out May 15 $95 to May 22 $95 for $.37 per share credit.
  • DXCM – Diagonal Roll Up From May 15 $350 to Jun 19 $380. Increases our profit potential if called away by $30. Required an investment of $15.73 per share.
  • EW – Roll Out May 15 $220 to May 22 $220 (hoping for stock appreciation). $1.10 per share credit.
  • HAL – Option Expired – Look to write new call on Monday
  • ILMN – Diagonal Roll Up from May 15 $330 to May 22 $335 increasing our profit potential by $5 per share. Required an investment of $.90 share…..great trade.
  • PTON – 2 Diagonal Roll Up from May 15 $33 to May 22 $45. Increases profit potential by $12 share. Required investment of $11.18 share. Not a great trade. Further PTON upside may be limited based on low premiums that were available.
  • PTON – 3 May 15 $40 Call options called away as stock was at $48. Probably not replace the stock.
  • SDC – May 15 $7.50 Call options expired (stock below $7.50).
  • SDC – Sold May 22 $7.00 Call options to reestablish covered call. $.37 per share credit.
  • STE – Rolled Out May 15 $155 Call to Jun 19 $155 for $5.28 per share credit.
  • T – Rolled Out May 15 $29.50 Call to May 22 $29.50 Call for $.09 per share credit.

BCRX CC June 19 $5 Net @3.98 with stock at $5.07

Company conducting clinical on corona virus (similar to Gilead). Wouldn’t hurt to cover the back door with some of the premium.

CVX@NYSE (Name: CHEVRON CORP) announced a cash dividend with ex-dividend date of 20200518 and payable date of 20200610. The declared cash rate is USD 1.29.

#dividend $CVX

ILMN Sold 5 May 15 $325 Call to cover long stock @ $1.90 Stock up $8.66 today

#coveredcalls $ILMN

WF – Might be time to give up on this one – Roll Down May 15 $27.50 to $24.50

Trades

BYND Rollout $125 to May 15 $130 $1.65 Credit

ISRG Diagonal Up May 8 $500 to May 15 $530 $26.55 Debit

SDC Diagonal UP May 8 $7.00 to May 15 $8 $.29 Debit

SDC Diagonal Up May 8 $7.50 to May 15 $8 $.12 Credit

New CC 1 Amazon May 15 $2380 Net $2344 Net

ET Diagonal DOWN May 8 $9 to May 15 $7.50 $.40 Credit

WFC Diagonal DOWN May 8 $27.50 to May 15 $27 $.18 Credit (Hopeful thinking?)

CAH Diagonal UP May 8 $47 to May 15 $49.50 $.80 Debit

PTON Assignment and evolution of the position

CC strategy left a lot of money on the table with the big run up. Maximized the profit on the position ….but tough to leave the $ on the table.

14.7% Return in 21 days….would take that any time.

Should have rolled up prior to earnings announcement and again yesterday after strong opening. I would like to have a position in PTON and continue writing. I rolled PTON up in other account…caught sleeping on this one.

EW STO Covering Existing Stock May 15 $220 @$3.30 w/stock at $218

Call expired last Friday, was hoping for a rebound to sell into

BYND STO 3 CC May 8 $125 net $118.9 Stock at $123.88

#coveredcalls

#bynd

DXCM up to $364.28 Expensive Roll Up of CC’s

Significant investment to maintain CC positions. Don’t want stock called away due to tax implications. Share of account value getting too high.

BTC May 15 $310 sold at $35.03 and closed at $62.95

BTC May 15 $320 sold at $27 and closed at $53.32

STO May 15 $350 at $28.24

STO May 15 $360 at $21.32

Leaves CC’s with strikes at $330, $350, $360.

#coveredcalls, #dxcm

BTO 5 ILMN CC May 8 $310 Net $304.48 Stock @$309.31

Lost stock to assignment on the weekend

#coveredcalls

Summary of Positions – IB

CVX Diagonal May 1 $85 to May 8 $90 Debit $2.66

DXCM – no action – May 15 Exp

EW Expired – Did not roll, write if stock strengthens

HAL Calendar May 1 $9 to May 8 $9 $.19 credit

PTON – Diagonal Up May 1 $31 to May 8 $32 $1.95 credit

ILMN Expired – Did not roll, Write if stock strengthens

STE – No action – May 15 Exp

T – Calendar May 1 $29.5 May 8 $29.5 $.32 credit

Eight of nine positions making money. One losing position is on medical supplies company that was granted temporary approval to re-sterilize N95 masks! Overall net profits still positive but dropped about $3,000 from Thursday to Friday. My Schwab account does not have 8 of 9 positive positions!

#coveredcalls

ASSIGNED ON 53 SDC MAY 1 $6. BTO 50 CC SDC MAY 8 $7.0 NET $6.40 STOCK AT $6.90

#coveredcalls #SDC

New CC on BCRX May 15 $4.00 net $3.26, stock @$3.84

#coveredcall #BCRX

CC on ET, Roll from $7.5 to $8 to $8.5 to $9 in 4 days! $.305 Div payable 05/05

New 100 CC SDC May 8 $7 for net $6.50, Stock was at $7.04

#coveredcalls #SDC

Assigned on 87 of 100 SDC $5.50 Calls. 15% in 35 days.

Would have preferred to roll out and up later in the week…but happy with the profitability of the trade. Probably replace the shares today and sell May 8 $6.50.

The #coveredcalls #SDC

DXCM Covered Call Roll Up

Rolled 30 May 15 $290 Calls, 10 to $310, 10 to $320, 10 to $330

Stock fell $20 yesterday going into earnings. Positive call, great numbers in Q1. Stock up $28 to $341. Still conservative on the calls but more upside than sitting at $290.

#coveredcalls #DXCM

SDC Call Diagonal Roll May 1 $5.50 to May 8 $6.50 net $.60 stock at $6.76

#coveredcall #roll

CC on ET May 8 $7.50 for net $6.99 ($7.17 share – $.18 Option) Ex Div May 6 $.305

#coveredcall #dividend

STO 3 PTON May 1 $32 @ $1.80 to re-establish CC

Case Study – IHI CC Strategy, 53 days in, 12 Option Rolls

IHI is a medical device ETF. Consider it to be a reasonable “safe” haven as it has 50 of the biggest medical device names in the portfolio. If the market goes south it usually comes back….as long as boomers need medical procedures. Covid-19 definitely playing a role in the number of “procedures” in the short term so the current calls are deep in the money entering earnings season. Thought the group might find it interesting to follow what has happened so far. IHI dropped from $246 entry to under $190). As it fell I rolled down, and rolled down. With each roll I pulled out some premium trying to hold onto as much value as possible. I felt like I was getting about $4.00 of premium each time I gave up $10 of strike price. On the way back up it felt like I paid $7.00 of premium to roll up $10 of strike price.

After 53 days the return is 2.1% and continuing to run. Not much time premium on the current May 1 in the money calls. Happy with the return considering the volatility in the period.

This image has an empty alt attribute; its file name is screen-shot-2020-04-26-at-11.20.26-am.png
This image has an empty alt attribute; its file name is image-9.png

#coveredcalls

Wk Ending 4/24 – CC Positions and Gain/Loss Status

Positions established between 03/02 and 04/22. All positions rolled to May 1 except DXCM and STE (monthly)
Weekly Performance +.63%. Healthy rebound from losses early in week.

#coveredcalls

SDC Partial Assignment + Roll Up and Out

Assigned on 18 of 71 calls last night. Rolled Apr $4.50 up and out to May 1 $6.00. Stock was at $6.00 when I did the roll….then reversed and gave up any gains. Probably should have waited until tomorrow but I didn’t want more called away.

PTON CC Apr 24 $31 Net $30.14

#coveredcalls, #peloton

CC’s into back of Week

CVX 24APR2020 85 C
EW 24APR2020 220 C 
HAL 24APR2020 7.5 C
ILMN 24APR2020 315 C  
SDC 24APR2020 4.5 C
T 24APR2020 31 C  

Had DXCM CC’s pulled away on Tuesday.

PTON CC Apr 24 $32 Net $30.75 #coveredcall

Assigned on CCL Apr 17 $12.50 14.4% Return 11 Days

Thank you to Option Iceman for the trade. #coveredcalls #returnoninvestment

Stock was hovering right around $12.50 strike price as market was closing. Couldn’t get a fair price to roll out so didn’t do anything and it got assigned. Happy with the trade.

#ccl

#coveredcalls #DXCM

 ~ JEFFLSMITH ~ EDIT “DEXCOM COVERED CALLS – STOCK RISES $100+ IN A MONTH”

In the past month Dexcom (DXCM) has risen from $190 to over $300. Great news for the stock…..not so good for the APR 17 $260 call. It is discouraging when a stock goes on a huge run and you sold an “at the money” stock option before the rise. The example below is real. $50,505 gain from buying 500 stock on Mar 3 at $206.99. I sold Apr 17 $200 Calls when I bought the stock. The calls have been “rolled up” twice from $200 to $230 and then to $260. Rolling up required an additional $20,728 investment. Instead of a $50,505 gain on the stock the net gain is now $19,180, 40% of what it could have been. 

But here is the good news. In 29 days the CC strategy is returning 19.1%. Annualized 241%. Rather than be remorse about the money I missed…..very happy with the potential return so far. 

Today is decision day as the Apr 17 $260 calls expire. 

Alternatives are:

  1. Do nothing. Let the options expire and take profit of $19,810.

2. Roll the options out (buy back Apr 17 $260 Call and sell May 15 $260 Call). Rolling the call out generates a credit of $8 per share or $4,000 (Buy back Apr 17 $260 Call for $49 ($24,500) and sell May 15 $260 for $57 ($28,500). 

3. Roll the options out and up (buy back Apr 17 $260 Call for $49/share and sell May 15 $305 Call for $29/share. Rolling the call out and up requires an investment of $9,500 (500 shares x $49 = ($24,500) – 500 shares X $29 ($14,500). Rolling up and out increases the strike price from $260 to $300 ($40 a share upside). 

On the surface alternative #3 looks like the best idea. The “wild card” is an earnings announcement in early May. Historically Dexcom has shown high volatility around earnings. Stock can go up or down by 10%. Many medical device companies are announcing Q1 earnings and pulling their financial projections for the rest of 2020 until they understand how Covid-19 will impact them. 

The downside of adding more Dexcom investment is further portfolio concentration. Dexcom now represents $156K of $236K (66%) of the portfolio. Not a good situation if things were to go wrong. 

Likely action…..allow at least 1 Apr $260 Call to be “assigned” and sell 100 shares of stock. Roll the remaining 4 Apr $260 Calls up and out….but not all the way to $305. Probably sell $280 or $290 to offer some protection over the earnings call. This takes some of the profit off the table and helps with the portfolio %. Income tax implications are important….but this is long enough. 

IHI CC Roll Up and Out

Apr 17 $230 to May 15 $240 Debit $2.30. IHI at $248.16 when written.

DXCM Rollout

Rolled Apr 17 $260 Call to May 15 $260 Call for $12.10 Credit. Stock is up $11+ at $292. Don’t want to roll up. Earnings 4/28. Tend to be very volatile and I have been burned at earnings. Large long term capital gain on the stock and don’t want it called away.

Covered Call Strategy on EW

Good return on the strategy so far…..but it would have been better to just buy the shares. Shares dropped after establishing the CC and I rolled down for credit. When stock came back with strong momentum I have been too conservative selling at the money calls. Should have sold out of the money calls but volatility made me conservative. Can’t complain about the rate of return….EW is a stock I would like to keep.

Looking for input on tracking trades

Curious if traders have a way of tracking the profitability of a “CC position” over time. I find it challenging to keep track of whether or not I am making money with a strategy after multiple steps (roll up, down, roll out). I see many traders carrying a lot of positions with lots of rolls. I made the worksheet below as a first attempt for tracking. Any ideas or suggestions are welcome. I am using actual data from a trade from last week where I established the CC then rolled the short call out from Apr 9 to Apr 17. So far I have lost $2,400 on the stock and gained $4,400 on the options for net gain of $2,000. When I did the roll the stock was trading at $4.70. It gets complicated managing this across 10 different positions. If you want a copy of the worksheet to evolve let me know in the replies.

HAL Covered Call Roll

5 CC established net $6.83.

Rolled 5 Apr 9 $7.50 Call (bought $.88) to Apr 17 $7.50 (sold $1.15).

With roll credit cost reduced by $.27 to $6.83.

Stock trading at $8.35.

SDC

Rolled 200 Apr 9 $4.50 to Apr 17 $4.50 for $.32 credit. Paid $4.52 for stock when call established. $4.70 now.

Two expirations

Two positions expiring today.

CCL Covered Call 04/9/20 $12.50 net cost $11.68

HAL Covered Call 04/09/20 $7.50 net cost $6.84

SDC

Bought Covered Call Apr 9 $4.50 Net $4.38