VIAC CC Recovering ….slowly becoming profitable

Patience with the VIAC CC is starting to pay off. On April 1 when we established the CC and bought the stock at $45.12 we thought VIAC had hit bottom….but the stock continued to decline (blue line showing profit/loss on the stock). Despite the drop in the stock we resisted the temptation to roll the May 21 $45 Call down. As the stock recovers the short option has remained profitable. Had we rolled down we would have offset some of the gain from the stock recovery. Plans are to keep the position and roll the calls as we approach 21 days to expiry.

The position has become profitable….we can almost buy a case of beer!

Closed out DXCM CC, Profit of $4,252.

DXCM announced earnings today after the market closed. We decided to sell our shares and buy back the options to avoid the wild swing that follow the announcements. History was projecting the stock would move +/- 8% ($32).

We established the position on July 20/2020. We rolled the position 18 times. All of the profit was generated by selling the options. The stock was purchased for $432, dropped as low as $360 then recovered to $400.

DXCM has been a core holding in my investments for the past 10 years. When the dust “settles” I will likely start a new position.

$432

New Covered Call on DHI (Home Builder)

Established new CC on DHI. Bought 200 shares @$77.68 and sold 2 “in the money” Feb 19 $75 Calls for $3.94. Net price $73.74. If stock stays above $75 potential profit of $1.26 on the position + $.20 dividend (ex div 2/16) = 1.9% in 17 days, 43% annualized. Almost $4 of downside protection on the position.

IB Acc’t -May + $24,118 10%, YTD +$72,061 37%

May was a good month for the account adding $24,118 or 10%. YTD gains are $72,061 or 37%. Market bounce on Thursday and Friday helped with the month end numbers.

Daily account value in May 2020.

YTD 2020 account value.

On Friday “life” got in the way. We moved to the cottage for the summer. Internet service is less than optimal and I was not able to complete planned trades before the market closed. All 12 positions are profitable.

Net profit can come from stock, calls or stock and calls. Profit source:

  • Short calls in 4 positions
  • Both stock and short calls in 4 positions
  • Stock in 4 positions

Six of the positions were assigned (stock price above strike price). Three of the positions “expired” (stock price below strike price). PTON was the only stock where we wrote a lower priced option (diagonal down) for Jun 5. No action required on BCRX and DXCM.

On Friday we should have rolled options that are being assigned or expired. On Monday morning we will establish new positions. If the stocks move up before new positions are established it will cost more money. Stocks move down at opening it will be cheaper. Prefer not to “risk” market direction and have established positions.

Covered Call on CVX (Chevron) Expires 5/29 +$1,130, 14.7% in 51 Days, 105% Annualized

Last Friday the CC position on CVX was expiring. We made the decision to “diagonal down” from May 22 $95 to May 29 $90 as the stock price had fallen under $90. This was very conservative as we were giving up on stock appreciation over $90 in exchange for the option premium of $1.93. So far this week the position has increased in value by $130.

This week we have another decision. CVX stock has increased in price to $91.30. If we do nothing the stock will get called away if it remains over $90 today. CVX is a stock we are interested in holding so we will either do a “calendar spread” (Buy back May 29 $90 and sell Jun 5 $90) or do a “diagonal up” (Buy back May 29 $90 and sell a higher strike price Jun 5 $91, $92, $93,….).

A calendar spread is conservative (more downside protection and less upside). Diagonal Up can be aggressive depending on how high the strike price is above the current strike price. The higher the strike price, more upside….higher the strike price, less downside protection. We will likely sell a $91 or $92. The goal for this position is to generate $2-300 a week in option premiums and collect the dividends when available.