This week was a wild ride. Not only did I pull the trigger on rolling my covered call too early, then the news about Apple making an autonomous vehicle broke. On Monday morning, VLDR was trading around $20-$21, then at 3:30p, the news breaks and 20% later, closes the day at $24.63. Then Tuesday morning is more of the same. Jumps to $30.60 just before 11a before stair stepping down the rest of the week to close today at $24.68.
I had to continue to remind myself that it’s ok for VLDR to trade above $30. On the one hand, I now have 60 days until expiration and on the second, I’m ok with 60% gain in two months – even if that means I miss out on gains above my breakeven.
The next thing I’m going to do is make a paper trade as if I’d followed my own rules and roll my covered call about 2 weeks before expiry and about 45 days to the next target expiry. This would be around Jan 4th or 5th. I’ll evaluate to see what difference, if any, that makes.
Because VLDR’s next quarterly is March 11th, I likely won’t take any further action until after it’s released and the market reacts. This means I’m riding through my Feb 19th expiry. My scenarios are:
- VLDR closes above $30, which means I must sell my shares for $30. At that point I will wait until after March 11th to either
- Sell a put to buy back in
- In this first case, I’ll buy back in if the quarterly report response is not positive and the share price drops and sell a put for March 19th.
- Find another company to invest in.
- In this second option, if the quarterly report response is positive and pushes the share price up, selling a put for VLDR to get back in may not be worth tying up my funds (or I might not have enough $) and so finding another opportunity may be necessary.
- Sell a put to buy back in
- VLDR closes below $30, then I’ll look to sell another covered call after March 11th for March 19th expiry.
- A third option I will consider is to close my open position by buying it back, if only to reduce the risk of another Monday/Tuesday like this week, and to continue writing calls after earnings.
GE had an overall down week losing 2.11% to close today at $10.65. Not a lot to report here as my earliest expiry is March 19th; lots of movement, but mostly down with unrealized losses. My primary target is to sell my Mar 19 calls with about 45-30 days left. That puts me early to mid-February. GE’s quarterly is scheduled for January 26th so that seems like ok timing, but we’ll see.
Once I do take action on GE calls, I created a spreadsheet to calculate my return:
My total exposure is $695.97 if everything expires OTM.
I think that’s it for this week. Overall, my underlying VLDR performed well (too well!) making this week a net unrealized gain. I close the week with a portfolio value of $2,724.28 or +9.8% on the week.