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Safeway Inc. Message Board

  • erikcs1 erikcs1 Jan 23, 2013 11:08 AM Flag

    I Can't Win on Covered Calls

    EVERY time I sell covered calls my underlying stock goes up. So I bought this at 16.15 back in October and sold March 20 calls. I figured no way this thing goes up over 20% in 5 months. I'll still have a good profit but this always seems to happen. But darn sure if I didn't sell the calls it would have sunk like the Titanic.

    Oh well. Still has a couple of months to go down some I guess...

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    • try shorting puts next time and cheer as it goes up and you move on with 90% of your profits within a shorter span of time

    • coreylynnh Jan 23, 2013 3:07 PM Flag

      I agree with insigniapartners. I don't buy stock outright. SWY looked good in October so I began selling the 16 puts in October (at 3.24% premium), then in November (at 2.14% premium), and again in December (at 2.45% premium). When the stock rose to above 19 on December 6 I bought the 16 puts back for a nickel so I could put the money into puts with other stocks (a weekly INTC 20 put for 0.8% premium). In January I sold the 17.5 puts for 2.24% premium. I tried to get 18 puts sold for February at the price I wanted but couldn't since it has shot like a rocket. Now I will just wait for it to come back down a little. Right now the 18 put is my limit, I won't sell puts any higher. Then if ever put on the stock you can start selling covered calls. I would be interested what premium you received for that March 20 call. In reality I think SWY may have a hard time staying above 20 by March expiration, but it sure is moving up nicely.

      • 1 Reply to coreylynnh
      • Corey. I was mistaken in my post. I sold Dec 18 calls in October which expired worthless. I sold the March 20 calls after that for .45. I think maybe you're right about it staying above 20 by March but time will tell. Only problem with selling puts and such is that I have no margin on scottrade so I can't really do that. Even if it gets called I'm still a good ways up on it so I guess I can't be greedy or complain too much. Just funny how this always happens to me. So basically if I'm selling covered calls go ahead and bet the mortgage going long.