Presidential debate tonight may create a very different stock market….so how did we perform in the year leading up to the debate?

At the close today our IB account is up 110% versus S&P 500 up 13%. It has been a fun run….

Both Schwab accounts are at record highs. 20 of 23 open covered call positions are profitable generating substantial net profit (starting the tracking system April 24). 10 of the positions are more profitable due to covered calls. We have been selling “in the money” or “at the money” calls which increase downside protection….but hurt performance if the stock prices run up (which they have). We anticipate higher volatility until the outcome of the Presidential election is finalized and a President is sworn in. If Trump loses and contests the results who knows what market volatility be.

Treating Covered Call positions as a mid term strategy versus “one and done” trades.

Many investors who utilize options like to “trade” versus considering the positions to be mid/long term strategic investments. Our preference is to invest time picking a stock to sell covered calls against and maintain the strategy over an extended period of time. Five current open positions we have “worked” over previous 91 to 138 days are shown below. The black line represents the current profit from the position. The calls we used to “cover” the stock evolve depending on how the stock is performing. Some weeks we roll up or roll out or write a calendar spread. If the stock drops and we remain optimistic on the stock we might not write options for a couple of weeks waiting for a bounce back up. At the bottom of the DOCU example I have included a table that includes the trades.

The daily profitability for DOCU position are listed below. Under the Comment column you can see the evolution of the calls used to cover. Options trade weekly and trades shown were week to week.
DateStock P/LOption P/LDaily P/LComment
6/28/20$0$0$0 
6/29/20$1,239($321)$918 
6/30/20$1,401($186)$1,215 
7/1/20$3,426($1,634)$1,793 
7/2/20$7,035($5,829)$1,206Diagonal $170/$190
7/6/20$6,936($5,492)$1,445 
7/7/20$9,063($6,422)$2,642 
7/8/20$11,643($8,747)$2,897 
7/9/20$13,464($10,470)$2,994 
7/10/20$12,771($9,429)$3,342Diagonal $190/$200 Debit $5.50
7/13/20$6,744($6,482)$263 
7/14/20$8,067($6,677)$1,391 
7/15/20$7,587($5,831)$1,757 
7/16/20$7,254($5,523)$1,731 
7/17/20$8,661($5,667)$2,994Calendar $200/$200 Credit $4.19
7/20/20$10,335($6,057)$4,278 
7/21/20$10,047($5,615)$4,433 
7/22/20$10,932($5,930)$5,003 
7/23/20$9,285($4,880)$4,406 
7/24/20$7,023($4,149)$2,874Calendar $200/$200 Credit $2.76
7/27/20$8,619($4,149)$4,470 
7/28/20$8,757($4,149)$4,608 
7/29/20$12,483($4,149)$8,334 
7/30/20$13,920($4,149)$9,771 
7/31/20$14,787($7,764)$7,023Diagonal $200/$212.50 Debit $6.50
8/3/20$17,622($9,729)$7,893 
8/4/20$18,042($9,962)$8,081 
8/5/20$17,544($9,444)$8,100 
8/6/20$14,442($6,728)$7,714 
8/7/20$11,166($5,553)$5,613DiagonaL $212.50/$202.50 Credit $6.37
8/10/20$9,252($4,436)$4,817 
8/11/20$7,284($3,770)$3,515 
8/12/20$7,728($3,683)$4,046 
8/13/20$9,552($3,723)$5,829 
8/14/20$9,651($3,389)$6,263Calendar $202.5/202.5 Credit $4.24
8/17/20$12,048($4,356)$7,692 
8/18/20$12,465($4,559)$7,907 
8/19/20$12,201($4,319)$7,883 
8/20/20$14,091($5,631)$8,460Diagonal $202.5/$210 Debit $3.05
8/21/20$12,792($4,869)$7,923 
8/24/20$11,088($3,828)$7,260 
8/25/20$11,265($3,609)$7,656 
8/26/20$14,030($4,929)$9,101 
8/27/20$14,169($4,727)$9,443 
8/28/20$14,310($4,816)$9,494Diagonal $210/$215 Sep 18 Credit $10.38
8/31/20$16,638($5,910)$10,728 
9/1/20$30,378($18,225)$12,153 
9/2/20$29,286($17,385)$11,901 
9/3/20$22,341($10,965)$11,376 
9/4/20$14,610($3,984)$10,626 
9/8/20$11,427($1,905)$9,522 
9/9/20$13,275($2,115)$11,160 
9/10/20$11,523($1,193)$10,331 
9/11/20$9,120($371)$8,750 
9/14/20$10,623($221)$10,403 
9/15/20$10,344($104)$10,241 
9/16/20$8,844$58$8,903 
9/17/20$7,755$91$7,846Diagonal $215/$195 Credit $6
9/18/20$8,196$136$8,333 
9/21/20$11,244($1,716)$9,528 
9/22/20$13,377($3,336)$10,041 
9/23/20$13,254($3,134)$10,121 
9/24/20$10,863($891)$9,972 
9/25/20$13,466($2,928)$10,518Diagonal $195/$210 Debit $8.79
9/28/20$13,712($2,643)$11,069 

Current IB Covered Call Positions, Net Profit $56,789

We currently have seven covered call positions in our account. 6 of 7 positions are profitable.

Graphs below track the progression of the positions over time. BCRX is an interesting study. Stock price has fallen and generated substantial loss….but selling options with good premiums has resulted in a very profitable strategy. INMD shares were called away on the weekend.

STE Covered Call Profit of $4,170 After 112 Days, +13.5% or 44% Annualized

STE is likely a stock you have never heard of…..but it has been a good stock for covered call writing. So far the position has generated $4,170 in profit. Not as sexy as AMAZ or FB but profit is profit. Company pays a dividend yielding about 1%. The position has earned a profit on both the stock and the options, a hard combination to find.

Rolling down AMAZ Sep 18 $3200 calls to $3000 to protect $50,000 profit.

Very defensive roll down this morning on Sep 18 $3200’s to $3000. The trade has been profitable ($51,146 in 123 days). $3200 calls were down to $2.00 so they offered no protection against further drops in the stock. Might regret the decision tomorrow when they expire but I would rather protect the profits than hope for a rebound and watch further erosion of the profit.

53 Days Into INMD Covered Call Strategy Profit $4,476, ROI 15.2% or 105% Annualized

On July 13 we opened our covered call position on INMD. We rolled the options up from Jul 17 $30 to Aug 21 $35 on July 17. On Aug 21 the options expired worthless. We didn’t open a new option position until Sep 3 after the stock moved up over $4. Based on market volatility we were conservative selling a Sep 18 $30 for $5.00.

We have generated $3,706 in profit on the stock and $770 in profit from the options.

August Month End IB Account +$20,000, 6.5% ROI in the month

August was a great month in the market which is reflected in our monthly result. The account increased by $20,000 or 6.6% and outperformed the S&P.

Positions as we exit the month. All eight positions are making a profit. Four of the eight are more profitable due to covered call writing. The ($33,339) loss on writing options reflects our conservative strike prices (dominated by the ($47,059) loss on DXCM. It is hard to believe this market can keep going up and up. If we wrote more aggressive options (higher strike prices at or out of the money) our profitability would be higher…..but we will continue to be cautious and write mostly in or at the money options.

New Covered Call on NIO, after 7 days profit of $1,700, 12.3% or 642% Annualized.

On 8/20 we established a new CC on NIO purchasing the stock at $13.80 and selling Aug 21 $14 calls. Stock has significantly moved up closing yesterday at $19.88. We are making a profit of $1,700 on the position so far….but the return would be higher had we not covered the position. So far we have done a calendar roll on 8/21 and a vertical roll on 8/26. Planning on a calendar roll today. Option premiums will be high on this volatile stock.

Assigned on BAX Covered Calls, Profit $3,325 in 82 days, 3.8% or 17% annualized.

Baxter had a nice jump in stock price the last couple of days closing at over $86 yesterday. We were short Aug 28 $83 and $83.50 calls. Plans were to roll the options up and out (diagonal) today and hope the upward momentum continued. Stock goes Exdiv today with a dividend of $.245 which we intended to capture. Made a mistake not rolling up to “out of the money” strike price yesterday and lost the dividend ($367) as a result.

We may replace the position today. Baxter doesn’t have the volatility (lower return on covered calls) but it pays a solid dividend and is a good core healthcare holding.