Assignment (IRA): QQQ September 16th 321 Covered Call
... with a cost basis of 317.10/share.
Comments: A continuation post to track my cost basis in shares that I will find in my account on Monday due to the June 24th 321 short put expiring in the money. Knowing that this was the likely outcome, I went ahead prior to assignment and sold a short call vertical against and then rolled it out to the September expiry on strength with a resulting cost basis of 317.10. (See Post Below).
There are a couple of different approaches I can take at this point: (1) Sell call against, targeting the <16 delta strike in the expiry nearest 45 DTE paying around 1% in credit (or a similar, delta-based call) -- much as I do on the put side, staying in the stock and running that ad finitum; (2) Sell call against at my existing cost basis, looking to exit the shares at the earliest possible juncture either via call away or closing the setup out at or near max.
As a general rule, I opt for the latter, since my preference is to stay in options contracts due to their flexibility; one can't, after all, roll stock for strike improvement. Once you're in stock, you're basically married to it, and with QQQ in particular, it's not as though the market is "paying you to wait" -- the annualized yield is a paltry .74%.
As usual, we'll see how things go. Currently, I've got some work to do, since my cost basis is 317.10* relative to where the Q's finished on Friday at 294.61 with the September 321 having 6.22 ($622) of extrinsic left in it.
* -- In reality, my cost basis is better than this. I collected a total of 7.13 ($713) prior to assignment. (See Post Below). For cost basis reduction purposes, however, I'm treating the setup as though I bought the shares at 321 (the short put strike) and reduced their cost basis by the credits collected by the sale of the short call vertical against and then going from there.
Comments: A continuation post to track my cost basis in shares that I will find in my account on Monday due to the June 24th 321 short put expiring in the money. Knowing that this was the likely outcome, I went ahead prior to assignment and sold a short call vertical against and then rolled it out to the September expiry on strength with a resulting cost basis of 317.10. (See Post Below).
There are a couple of different approaches I can take at this point: (1) Sell call against, targeting the <16 delta strike in the expiry nearest 45 DTE paying around 1% in credit (or a similar, delta-based call) -- much as I do on the put side, staying in the stock and running that ad finitum; (2) Sell call against at my existing cost basis, looking to exit the shares at the earliest possible juncture either via call away or closing the setup out at or near max.
As a general rule, I opt for the latter, since my preference is to stay in options contracts due to their flexibility; one can't, after all, roll stock for strike improvement. Once you're in stock, you're basically married to it, and with QQQ in particular, it's not as though the market is "paying you to wait" -- the annualized yield is a paltry .74%.
As usual, we'll see how things go. Currently, I've got some work to do, since my cost basis is 317.10* relative to where the Q's finished on Friday at 294.61 with the September 321 having 6.22 ($622) of extrinsic left in it.
* -- In reality, my cost basis is better than this. I collected a total of 7.13 ($713) prior to assignment. (See Post Below). For cost basis reduction purposes, however, I'm treating the setup as though I bought the shares at 321 (the short put strike) and reduced their cost basis by the credits collected by the sale of the short call vertical against and then going from there.
Trade active:
The September 321 had 6.22 of extrinsic in it, but finished the day at nearly 50% of that (3.20 or so). Rolled it to the October 21st 315 short call for a 3.53 credit, resulting in a cost basis of 313.57 with the October 21st 315 having 6.80 ($680) of extrinsic in it. I could naturally wait for a bounce to roll, but would prefer staying mechanical rather than taking a chance that it could decline further such that the credit received for a strike above my cost basis is less productive.
Trade active:
The bounce that I probably should've waited for (but you never know). Rolling out on strength to the November 18th 315 strike for a 2.30 credit with a resulting cost basis of 311.27 with the 315 having about 10.21 of extrinsic in it. I'm fine with the shares being called away at 315 if that happens, but am not counting on it.
Trade active:
Rolled the November 315 out to December on this strength for a 2.48 credit. Cost basis of 308.79. Would have preferred to have been more patient, not rolled it out so far in time, since taking advantage of strength means rolling it out even further.
Trade active:
Am I wrong not to trust this up move? Rolled the December 315 out to January for a 2.51 credit. Cost basis of 306.28. The January 20th 315 has a whopping 23.04 worth of extrinsic in it, so I'll have to sit on my hands here for several cycles, since the next expiry after Jan is March. Naturally, if the entire setup (stock + short call) converges on break even, I'll consider taking it off and freeing up the buying power.
Trade active:
Rolled the Jan 315 short call to the March (no February yet) 315 short call for a 4.89 credit as price traverses the short call strike in order to collect maximum extrinsic. Cost basis of 301.40 with 28.82 or so of extrinsic in the short call.
Trade active:
Rolled for a call side realized gain of 13.50 ($1350) or so (small consolation, as QQQ has cratered) to the June 16th 315 for a 6.03 credit. Cost basis of 295.37 relative to a close of 291.10 today with 21.38 of extrinsic in the short call. Basically, just trying to keep my break even at or near where the underlying is currently trading. I'll start to consider rolling the short call down intraexpiry rather than extending duration; June is somewhat long-dated, even for me.
Trade active:
Closed the longer duration June 16th 315 short call for a 11.75 debit, resulting in a 9.63 ($963) realized gain on the short call side and sold a shorter duration January 20th 315 for a 3.38 credit. Cost basis now 295.37 + 11.75 - 3.38 = 303.74. This gives me greater flexibility with rolling, since the only place I could've rolled the June shortie was intraexpiry (down) or out to September (out or down/out).
Trade active:
Rolling at mopex from the January 315 to the February 17th 315 for a 2.02 credit. Cost basis of 301.72 with 6.31 of extrinsic in the 315 short call.
