Darn thing is starting to inch up towards that 57.50 strike price on my covered calls. But that's OK. I already have the premium. If the stocks get called out I can just buy them right back again if I want. The beauty of calls inside the IRA versus a regular brokerage account is there is no issue with the 60 day ownership in order to get the dividends Qualified. A not so subtle factor when buying a stock for its dividend and still selling covered calls.
Your post flags a risk factor that IMO often gets minimized. Selling covered calls is a sensible and safe strategy but to fairly access results a person should consider any lost profits. In the current example, lets say COP is trading at $65 on the expiration date. You would have a cash profit from the premium you collected (lets say $1.00) but would have to sell at $7.50 below market. IMO you would have sustained a net $6.50 per share loss for purposes of assessing the profitability of the strategy. If that loss is ignored selling covered calls would always be "profitable" because the most significant risk is being ignored even when it materializes.
Interested in your thoughts.
Can't wish you luck on that one, especially anytime soon. Maybe if there is a massive heathcare sector sell off in November it could knock it down? You may be missing some nice dividends know. I own MRO and it seems to be at a beaten down price but rising fast.
Well I wish the yield on XOM were a little more but I have it because they execute well and with their big annual buyback program the price seems stable. I am also long XOM and SSL in the energy sector.
I did exactly the same thing you did today. Took advantage of the price drop to add 200 @ 55.05. I now am holding almost 900 shares and am obviously long this stock. Been in it since 2008.
Sentiment: Strong Buy