Tough Week…..and Oct month end

Last week was a tough week for my covered call positions. Price decline in many of the stocks exceeded the protection offered by the call premiums. Over the past two weeks I would have been far better off with some “collars” (use call option premium to purchase an OTM Put option to establish a floor on potential losses) to protect on the downside. Collars would prevented the loss of tens of thousands of dollars on DXCM, PTON, SDC across my accounts. I have used collars before…..and like most people it seemed like I was wasting my money on the “insurance”. When the stocks didn’t drop it felt like you just gave away the money…..but I would have gotten everything back in last few days.

YTD the IB account is outperforming the S&P by 50%. Good result…but it look much better at the end of Sep than Oct.

You can see the impact of the last week with the steep drop in the chart above and below. In October we lost $26,975 or 8.5%.
I didn’t sell options against PTON, PYPL, REGN, or SDC. I like the stocks and am prepared to balance the risk of further drop against price increases this week. I sold off 300 of my 700 shares in DXCM to raise some cash to protect against a margin call this week.

Hope the election results are conclusive one way or the other and we see more stability by the end of the week.

One thought on “Tough Week…..and Oct month end

  1. Thanks for sharing. Collars, huh? I’m selling credit spreads to “generate” extra income, have been saved a couple of times last month. Collars seems also good to know, but how about buying some SPY put with long expiry as protection?

    Like

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