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Yes but this is just one trade. There will be many others in the future and in this kind of trade 26 cents does not make the difference. It is understanding how to trade the market direction that is important. If your outlook is negative, than buying tomorrow morning may be a lot cheaper than what I paid. Investing is about long-term investing, not one or two trades.
Absolutely no reason to be embarrassed. Every investor makes mistakes. Look at my Market Direction Portfolio trade yesterday. I was stopped out, took a loss and today I would have looked like a genius. LOL. That’s investing. It’s the big picture that matters and what we learn from our mistakes. Take care and glad to help.
Here you go. Here are 3 repair strategies to fix this trade if you are concerned about holding the shares into the different options expiry dates https://www.fullyinformed.com/members/understanding-x-dividend-dates-and-repairing-a-super-charge-buy-write-strategy-exxon-mobile-stock-trade-august-11-2015/
I am sorry to be so late. The dividend is over! Today Aug 11 is X dividend which is part of the reason the stock is trading so low. That coupled with China slowdown. Remember that the X-Dividend date means those who buy on X-Dividend are buying WITHOUT or EX the dividend. Your trade may still work but you will not be exercised out early.
TeddiNo, the call premium at the close was worth less than the dividend payout. Therefore the holder of the call was smart to grab the dividend through exercising the stock away from me as he would have made a bit on the call strike and picked up the dividend as well.
Yes but not until the VIX gets below $12.00.
Congratulations. What a great trade this one was. A lot of investors have emailed me. One investor did 35 calls so he certainly brought in a big dollar amount! I am glad your trade worked out.
Thanks for the post. I was exercised out on June 18 with the stock closed at $77.13. The dividend was just a bit over 50 cents and my call strike has less premium so I was exercised out of the trade. What call strike did you sell and expiry date?
I see nothing wrong with the trade. I prefer to be just below at $119. I would expect a pullback a bit tomorrow which is when I plan to add more.
Not sure about your calls but mine have doubled in value and I sold mid-afternoon today. https://www.fullyinformed.com/trade-alert-apple-stock-rebound-provides-100-gain-aug-10-2015/
I buy VIX puts usually only in bear markets. This is because the put premiums can fluctuate a lot more in bear markets. Remember that a put on the VIX works opposite to volatility. This year VIX puts mnay have not been too bad a purchase with the continual whipsaws.
What is your cost basis with all the roll downs on the 1500 shares you might be assigned? That will help me with some suggestions.
TeddiHi Sada;
You did not get enough for the covered call. You basically sold your shares for a loss the moment you sold the covered calls. This article explains what you did wrong. https://www.fullyinformed.com/members/intel-stock-understanding-the-super-charge-buy-write-strategy-trade-august-6-2015/
TeddiBuying calls this afternoon on Apple Stock. https://www.fullyinformed.com/trade-alert-apple-stock-the-change-in-trend-aug-4-2015/
If you used the stop-losses I outlined with the original trade you should have been taken out with a small loss. You can see from today’s Apple Stock trade that I am back in at the $106 put strike but now out to Aug 21 expiry. That should cover my loss. Did you remember to use a stop-loss and if you did not then review your trading strategy to determine why you did not use a stop-loss. Let me know your result.
That’s the trouble with the VIX. It is set by future cointracts so while the VIX may be higher today, the outlook is that it will not be higher by September. The VIX always needs a big jump of usually up to the $15.50 level to really get that 20% or better return. That’s when I start selling. We will need more than today’s action to get the call premiums up a lot higher.
I have had a lot of investors write me who are in ABX at $30.00. The key at that time was to sell Deep in the money covered calls. At some point ABX will recover so the question really is more can you hold on and how many positions do you have in the stock with a cost basis in the low $20’s?
TeddiHi Amy
How many XOP puts do you have?
TeddiWith August being poor I am staying below $120. My 5 trades this evening outlines what I will be doing with IWM in August. https://www.fullyinformed.com/members/investing-strategy-notes-and-5-trade-ideas-for-the-week-ahead-first-week-of-august-2015/
I don’t think this is too early at this time. I have been nibbling on a few this morning for September expiry.
It is the article that I linked to above which was written on July 14 https://www.fullyinformed.com/members/heading-into-earnings-on-intel-stock-for-july-15-2015/
Remember too that prices change all the time for options. Even when I use to twitter my trades as fast as I could, prices changed. Therefore take the trade outlined and apply it to whatever you are trying to set up. If you are seeking sort of around the same premiums at the same prices, just put in offers and let them sit. Often they will get filled. Remember too that prices often will be better than what I get especially a day or two later if there is a dip in the stocks I am trading in. This was a strangle trade on Intel headings into earnings.Yes I think $157.50 is a better put strike. On July 27 I sold 4 of the August 7 put strike for $1.86. It will be an interesting trade but I will probably close it early especially watching IBM today and the poor closing.