Covered Call on NIO generating unrealized gain of $23,447 in 115 days, 129% or 410% annualized.

On Sep 16 we established a CC on NIO when we purchased 1,000 shares of NIO at $18.17 and sold 10 Sep 18 $18 Calls for $.41. Over the next 115 days we have rolled the calls 20 times and sold naked puts once .

Transactions are in the table below.

We have primarily sold “At the Money” options. The continual rise in the price of the stock has forced us to repurchase the short calls at a loss creating an overall loss on the options of $17,305. We attempted to be more aggressive in rolling the options in the past month but the stock has risen from $42 to $59 making it a challenge.

Our intent is to continue to roll the options and keep the stock for at least 12 months when the capital gains on the stock will be taxed as long term gains (15%). In 2020 we will benefit from the option losses as they will offset some of the capital gains.

ATEC Position, Covered Call + Naked Put Generating positive results, Unrealized gain of +$1,687 in 28 Days, ROI 28.9% or 377% Annualized.

On 12/11 we opened a CC position on ATEC by purchasing 500 shares and selling 5 Jan 15 $10 Call options. In we also sold 5 naked Jan 15 $10 Puts as we were bullish on the stock and prepared to buy an additional 500 shares if assigned.

In subsequent trades we rolled the Jan 15 $10 Calls to $12.50 and then to $15. We also rolled the Jan 15 $10 Puts to $12.50.

Table below is a summary of the transactions.

IB Account up $32,611 or 9.9% in December, 2020 finished up $163,989 or 83.7%.

December was a good month generating capping off a great year. I wish the account had a history of performing at that level but that would not be factual. Historically a return of 2% per month was the target. Some months we met the goal, some months we missed. In 2020 the combination Covid and politics created an environment that was very conducive to covered calls and high premiums. It is highly unlikely the return of 80%+ will be repeated in 2021….but one can always hope.

December 2020 ….a month to remember!

We outperformed the SPX by a wide margin (87% vs 16%). Key to the performance was selling most of our positions in early March as news of Covid created uncertainty. This gave us cash to fully invest in April after the crash and participate in the rally. As the say…….Good to be Lucky…..Lucky to be Good.

Covid created an environment that freed up much more time to spend on investing. In the past I would spend about 10 hours a week trading. Now I spend five or six times that…..and probably over trade. Optionsbistro.com has been a fantastic resource for both trade ideas and learning.

Hope some of my experiences and sharing of strategy/trades has helped you make a higher return in 2020. Look forward to the start of a new trading year on Monday!

Assigned on EW Covered Call, Profit of $3,498 in 63 Days, ROI of 8.8% or 51% Annualized

On October 26 we established a covered call on EW. Over the next 63 days we rolled the calls on a weekly basis. We also tried buying buying “insurance puts” in late November. On Friday we were “rolling up” a lot of our covered call positions which requires incremental cash. To avoid increasing the margin in the account we decided to let the EW shares get called away. Not sure it is a good time to shut down the position as the graph shows the upward trend in net profitability over the past couple of weeks.

Table below shows the activity with the stock and the options over the past 63 days.

Happy with the return on the position…..I do believe EW is a medical device stock to hold for the long term……so might consider another position in the near future.

Assigned on PTON Covered Calls, Realized Profit of $21,915 in 155 Days, Return of 32.4% or 76% Annualized.

Over the past 155 days we have been developing our PTON covered call strategy by rolling weekly options (see table below for the weekly rolls). On Friday our order to roll did not get executed and the shares got called away. We didn’t want the shares to get called as it creates a tax liability (short term capital gains). Our plan was to keep rolling until we had held the shares for 12 months and taxes would be at the long term capital gain rate. However, a realized gain is better than a loss so happy with the outcome.

Highlighted in the green …..We attempted to buy Puts for downside protection….and lost over $10,000 of “insurance” money. I don’t plan on purchasing Puts as insurance going forward. I am looking for a way to “hedge” the volatility. Considering selling deeper “in the money” calls as one option.

We do plan on establishing a new position this week selling “at the money” puts and looking to be assigned (collect the premium to discount acquisition price).

IB Account Update and Positions

Account gained 1.39% last week increasing the account by $4,649. Still not back to all time high ($347,541) but we are getting close.

YTD the account is up 77.59%.

We carry 9 positions forward into next week. The tickers with the P at the end were positions where we added a long put to the covered call strategy. We exited most of the Puts on Friday as the cost of the “insurance” was exceeding the benefit (may regret it one day when the market has a significant drop). Adding complexity (Puts) to the CC positions made it difficult to track and monitor the profitability. Selling calls that are more “in the money” may be a more effective insurance (it will reduce potential return as a trade off).

8 of the 9 positions are profitable. We are carrying unrealized profits of $82,776. ATEC CC was a new addition last week. Dec 18 will be a big trade day as all of the positions have calls expiring.

Update on NIO Covered Call Strategy after 77 Days, Unrealized Profit of $15,175, ROI of 83.5% or 396% Annualized

The covered call strategy on NIO has been an interesting one to manage due to the volatility on the stock. Our return would be higher if we bought and held the stock (+$32,361). On 11/23 (see green section in table below) we added a new element to the strategy with the purchase of a Put hoping we can mitigate the impact of the price swings. In hindsight we overpaid for the “protection” of the put. So far the Put is doing what was intended as it gained value with the recent pull back in price.

Managing the covered call strategy on such a volatile stock is a wild ride. Time will tell if adding the Put element enhances the profitability. It does make us more comfortable to have the additional downside protection and protect the gains we have.

Covered Call Strategy on STE after 180 Days, Unrealized Profit of $10,045, 32.6% ROI or 66% Annualized

On Jun 1/20 we established a covered call with 200 shares of STE and sale of 2 Jun 19 $155 Call options. Since that time we have developed the position by adding additional shares (performance was good so we added more shares) and rolling the calls 7 times. Overall the performance has been similar to just owning the shares. We also collected three dividends.

We are pleased with the performance of the STE covered call strategy and plan on continuing to roll the options and keep the shares for at least 12 months so we reach long term capital gains status.