I’ve managed this position several times, rolling up or down, and keeping the same expiry, or moving it ‘out’ a week at a time.
On 16 May, I let it get Assigned (the shares were Called away, sold to the Call Option BUYER), for $9/share.
I thought I’d update and close this description of the trade.
My goal was: at least 1% in gain/week.
The trade was 24 days in length. I’m gonna call it 3.5 weeks.
I bought at 8.52/share and sold at 9/share. so, 0.48/share short term capital gain.
During the 24 days of selling Covered Calls, I gained a total of 0.82/share in premiums.
Total gains was 1.30/share.
1.30/8.52*100 = 15.2% total gains. PRETAX.
Short term tax rate: 36%;
adjusting for taxes, 1.30- 0.46= 0.83/share.
and the total POST TAX gains (0.83/8.52*100) was 9.74%.
In 3.5 weeks (24 days). or 2.8% / week. Which meets my ‘at least 1%/week’ goal.
RGTI is a HIGH RISK stock. That’s why it paid 2.8%/week.
You gotta know your Risk Tolerance, and adjust your goals and expectations accordingly.
Why did I go through this ‘effort’? Cause I wanted INCOME… DISPOSABLE INCOME.
Let me describe a past interaction:
In the late 1970s, a neighbor had a millionaire boyfriend who lived in a distant city, and would visit his girlfriend by RENTING a jet and flying… spontaneously.
In a conversation about how he could ‘afford’ that, he casually mentioned that he would contact his broker, who would recommend a “penny stock that’s gonna GO UP!”. The millionaire would trade the penny stock, and make enough money to rent the plane, pay hotel bills, etc. and visit the girlfriend. IIRC, he said he’d ‘risk’ about $10,000 for the trip.
At the end of his ‘visit’, he still had his ‘basis’ and had paid the expenses of his visit.
That has always stuck in my head.
I WANTED the ability to ‘do a trade’, make some income, and then ‘dispose of the income’. Frivolously.
I bought a new phone with the income I gained from this RGTI trade.
Ok. This trade is now ‘closed’.
I hope that explaining it, was useful.
ralph