I figured out what to do with my calls. But first, since the Jan 26th earnings, GE’s price performance has been weak. After it’s initial bump, GE had a few losing days in a row, bottoming out to less than $10.70 on Jan 29th.
At this point, I’m a little more than 45 days to expiry and I know time decay is going to eat away all my extrinsic value. But I didn’t really have a reference for how much. Not until I plugged my option into an options profit calculator to visualize the potential outcomes:
Effectively, I needed GE to rise very quickly over a short period of time to be remotely profitable. Otherwise, I would sell at the first down day to retain whatever value remained.
Feb 2nd was a strong day, up nearly 5% to $11.24. A very good start, but as the above chart indicates (taken on Feb 3rd), I would need multiple +5% days, over the next week to two weeks max, to get to profit.
I don’t think it’s likely for GE to make those kinds of moves in the next two weeks. Today, Feb 3rd, happened to be a red day, so I set a limit order so that the value wouldn’t decrease further. I ended up selling for $0.39/contract or $153.34 after commissions. This represents a -40% loss on these contracts.
I’ll continue to track the option’s value over the next few weeks, but I feel good about selling here. The options profit calculator gave me the information to visualize how much I needed GE to increase and I don’t think that’s reasonable. I knew going in that I couldn’t time when, but I still think GE will continue to improve.
Next up, VLDR CC is expiring Feb 19th. My plan is to buy it back for $0.01 just before close to avoid any after-hours shenanigans. Mar 19 will be my next contract, but I won’t open it until after earnings, which is expected around Feb 25th.