Sharing current covered call positions in IB account along with graphs showing the progression of the return on each position. Left money on the table as stock prices have run past our strike prices on almost every position.
We like to find young medical device companies with innovative technology that we can write covered calls against. ATEC looks promising. Great revenue growth and really nice margins.
Options are monthly….not ideal but they don’t take much work.
Short options have helped but hard to offset $50 drop in stock price.
NIO is looking like a good stock for CC strategy. Lots of volatility on the stock, good premiums on the options. 8.9% return in 29 days…..so far. Had 1,000 shares called away at $17.50 and replaced them and doubled down with 2,000 shares and covered with Sep 18 $18.
Defensive roll down to protect what has been a profitable trade over the past 123 days. $3200 was down to $2 offering minimal downside protection. Over the past two weeks I have rolled down from $3400 to $3300, $3200 and now $3000. Roll downs have helped ….much more fun rolling up!
Baxter had a nice jump in stock price the last couple of days closing at over $86 yesterday. We were short Aug 28 $83 and $83.50 calls. Plans were to roll the options up and out (diagonal) today and hope the upward momentum continued. Stock goes Exdiv today with a dividend of $.245 which we intended to capture. Made a mistake not rolling up to “out of the money” strike price yesterday and lost the dividend ($367) as a result.
We may replace the position today. Baxter doesn’t have the volatility (lower return on covered calls) but it pays a solid dividend and is a good core healthcare holding.
All the positions below are part of covered call strategies across three accounts. Assigned on a couple I wasn’t planning on. Just couldn’t get all the trades done. Internet at the cottage in Canada is functional….but not ideal.
Our Covered Call strategy on ABT was established with the purchase of 300 shares on May 26. Since that time we have added to the position with 300 shares on 6/25 and 400 on 8/21. Covered Call strategy on Abbott has performed well aided by an upward move in the stock. We have rolled the options 13 times and had two expirations. Abbott is attractive for CC Writing as it trades weekly options, potential for growth on the stock price and pays a dividend.
SDC stock dropped following the recent earnings call. SDC covered calls have generated significant profits in my Schwab accounts. The drop in price created an opportunity to establish new covered calls in IB account. SDC has an interesting business model (changing the paradigm in the orthodontics). Two members of our family have had positive experiences with using the system.
The covered call positions were established with the purchase of 1,000 shares on the 8/17 and another 1,000 shares on 8/18. On 8/17 we sold 10 Aug 21 $7.50 calls followed by selling 10 Aug 21 $8 calls.
We liked the potential VIAC represented (believe the idea came from Coveredcalladvisor.com)
- Weekly options
- Great dividend
- History of stock growth
- Good option premiums
We opened a CC position on Jun 4 with the goal of capturing the $.24 dividend (Jun 12) and the option premium. Stock quickly jumped up in price and then fell back below what we paid (blue line in chart below). After the stock price fell and our Jun 19 $24 call expired at $0 we didn’t sell additional options hoping for stock price to rebound. On Jul 14 we started selling calls again. We have done calendar rolls at the $25 strike price each Friday.
In 70 days the position has generated profits of $5,050, 21.3% or 111% annualized. Very pleased with the return on this quality stock. I think it is a great CC candidate. Plans are to continue to roll the calls and capture the upcoming dividend in Sep.
On Friday SDC stock closed above our strike price of $8.50 resulting in stock being assigned. Purchased the stock on Jul 13. Adjusted our option position on a weekly basis. Diagonal down from $9 to $8.50 on Jul 17 and Calendar rolls on Jul 24, 31 and Aug 7.
On Friday PTON stock closed above our strike price of $66 and stock was assigned. We purchased the stock on July 20. Calendar roll on 7/24 and Diagonal Roll up from $63.50 to $66 on Jul 31. We had an order in for a diagonal roll up on Aug 7 but didn’t get filled resulting in the assignment. Intend to establish a new covered call position in PTON today.
On Friday ISRG closed above strike price of $675 resulting in assignment of the shares. Shares were originally purchased on June 1. Over the 67 days we held the stock we adjusted our position on a weekly basis as shown in the table below.
We have been tracking the daily profitability of covered call positions for an extended period of time. Many of the positions have been rolled several times. If stock is assigned it was removed from the tracking and considered closed. The following positions are “open”.
- Blue Line = Profit or Loss on stock
- Orange Line = Profit or Loss on Option
- Black Line = Net or Combined for Stock and Option.
If the Black Line is above the Blue Line the “covered call” is outperforming just owing the stock. If Black Line is Below Blue the stock is outperforming the covered call.
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????
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.
- 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)
Recent run up in stock to $8.66. Details on the CC position established in April are below.
- 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.
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.
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.
- 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.
Company conducting clinical on corona virus (similar to Gilead). Wouldn’t hurt to cover the back door with some of the premium.
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
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.
Call expired last Friday, was hoping for a rebound to sell into
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.
Lost stock to assignment on the weekend
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!
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.
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.
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.
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.
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.
- 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.
Apr 17 $230 to May 15 $240 Debit $2.30. IHI at $248.16 when written.
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.
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.
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.
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.
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 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