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).

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.