Covered Call Adjustment

Over the last two days I have changed my position in my holding of MED. I bought back the March $10 call, which I had sold at $.50, for $.10. Today I sold the June $10 call for $.75. This is a 7.7% premium on the current share price.

I have collected a net total of $195 of option premium less commissions of $28 on 100 shares (single option contract trades) of MED. I originally purchased the shares for $9.75 and they are currently trading for $8.43, so I am pretty close to even. I still think it is a good stock and I have upside to the strike price of $10.

The volatility of MED has allowed me to trade in and out of the options for good premium. However, trading a single contract at a time causes commissions to eat up a good portion of possible gains.

Advertisements

11 Responses to “Covered Call Adjustment”

  1. The Travelin' Man Says:

    I am an options newbie. Can you explain why you bought back the March 10s? Do you think that the stock will hit $10 in the next two weeks and get called away, or did you need to buy the calls back so that you could write the June 10s?

    Also, I am sure that you have considered this before now, but Zecco offers options trading at $3.50+.60/contract. It’s not much, but since you say that this small volume makes the transaction costs important, $1.50/ea may be enough to consider.

  2. planetim Says:

    Thanks for the response. I have sold and bought the calls on MED twice. As the stock has risen and fallen I have been able to increase my collected premium each time.

    I keep doing this because I still believe MED is a good stock and will get to $10 sometime. I sold the June contract, because the May does not come out until after the March expiration, and I was too impatient to wait.

    I am not familiar with Zecco, so thanks for the heads up.

  3. The Travelin' Man Says:

    I just opened my account with Zecco (I have no vested interest in the company other than as a customer), and it was pretty pain-free. I will likely not use this as my only brokerage account – at least until I am very confident in their business model, product, and service. But, as they say, free is free!

    If you choose to open an account, I will only advise you to make sure that you choose the money market sweep option, the ability to trade options request, and anything else at the beginning of the sign-up process. Apparently, any changes you want to make to your account after the sign-up requires paperwork to be sent, which seems a little onerous to me.

    Thanks for the details on the MED calls.

  4. Minesh "The Monthly Cash Man" Bhindi Says:

    I know EXACTLY what you’re saying about only trading single contracts and having commissions completly EAT up your profits.

    One strategy I use is to do covered calls where the majority of the cost of the share is paid for up-front.

    It’s easy to do, and it gives you a hell of a lot of downside cover (an added bonus 🙂 )

    Check out my website: http://www.CashForLifeSystem.com

    Happy Investing,

    Minesh Bhindi

  5. Pamela Says:

    What a material of un-ambiguity and preserveness of precious experience regarding unexpected emotions.

  6. spain greece live basket Says:

    I was just seeking this information for a while.
    After 6 hours of

    continuous Googleing, finally I got it in your web site.
    I wonder what’s the lack of

    Google strategy that don’t rank this type of informative websites in top of the list.

    Usually the top sites are full of garbage.

  7. http://www.aidanmoffat.co.uk/index.php/member/808 Says:

    Thanks so much for providing individuals with an

    extraordinarily nice opportunity to check tips from this site.
    It is always so beneficial plus full of a good time for me
    personally and my office

    acquaintances to visit your blog not less
    than three times in a week to read through the
    fresh secrets you have. And lastly,

    we are always

    contented considering

    the surprising strategies you give. Selected two

    points in this posting are really the very best I

    have ever had.

  8. elgg.orenda.com.my Says:

    Heya i’m for the primary time here. I came across this board and I to find It

    truly useful & it helped me out a lot. I am hoping to

    provide something again and aid others such as you helped
    me.

  9. weather in Alcala De henares spain Says:

    Along with everything that

    seems to be developing within this subject material,
    many of your perspectives are somewhat stimulating.

    On the other hand, I beg your pardon, but I do not subscribe to your

    whole strategy, all be it refreshing none the

    less. It seems to me that your commentary

    are actually not totally justified and in simple fact you are generally
    yourself not thoroughly certain of your assertion. In any case I did enjoy looking at it.

  10. zur.co.il Says:

    It’s perfect time to make some plans for the future

    and it’s time to be happy. I’ve learn this post and if I may just I desire to recommend you some interesting things or advice. Perhaps you can write subsequent articles

    relating to this article. I wish to read even more

    issues about it!

  11. Vincent Says:

    Hey! I know this is kind of off topic

    but I was wondering which blog platform are you using for this site?
    I’m getting tired of

    WordPress because I’ve had issues with hackers and I’m looking at options for another platform. I

    would be fantastic if you could point me in the direction of a good platform.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: