Keeping in mind the release of the critical CPI data this week, which could depress the market further if it does not meet analysts’ expectations, I open the following OTM covered call contracts on my existing shares.
| Name of Stock | Average Price (USD) | Strike Price (USD) | 7th Feb Share Price (USD) | Premium Collected (USD) | Expiration Date |
| 63.53 | 28 | 26.46 | 48 | 11 Feb 22 | |
| Nio | 45.15 | 25 | 23.99 | 38 | 11 Feb 22 |
| Palantir | 21.67 | 13.5 | 12.98 | 14 x 24 = 336 | 11 Feb 22 |
| Apple | 181.07 | 177.5 | 171.66 | 30 | 11 Feb 22 |
| Tesla | 1079.4 | 1100 | 907.34 | 1600 | 11 Mar 22 |
| AMD | 143.10 | 145 | 123.67 | 200 | 11 Mar 22 |
| Subtotal | 2252 |
I place these trades based on a few considerations
- I am generally bearish about the market and forsee that there is not going to be a rally anytime soon, at least until March.
- I do not wish to take too much risk either with ITM covered call either as a share price spike may mean I need to close my positions back at a loss, especially with growth stocks that are volatile in nature.
- As my share positions increase due to the respective PUT contracts being exercised, I will be selling more covered call contracts henceforth. Short term (weekly) trades may generate more returns but it is also more draining and stressful. Therefore, I sold 2 covered call positions on AMD and Tesla, with expiration date 1 month away. SP is above my average price so I do not make any loss if I were to sell away the shares upon contract expiration. I will not need to pay so much attention to the stock prices but I may roll these 2 contracts if share prices of AMD and Tesla keeps falling.
I hope the above reference trades and my thought process can be useful to you as you navigate through the volatility and uncertainties of the stock market.
***
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u are doing the right thing bro by acquiring some neg delta for your portfolio. eventho market up yesterday and your covered call position got hammered right off the gate, at least the leaps & stocks did well.
i took the opportunity to roll my fb 260 put out and down to 230 strike for a 20 dollar credit. earlier i sold a fb call thereby creating a strangle. my strangle delta is now only 12. there is some more things i can do to hedge the position but i think i will i will hands off for a while and see how things move from here. mkt v volatile. those who don’t know what is happening will be burnt gao gao. cheers bro.
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Thanks for sharing bro! Oh ya, the market went up but we don’t know what’s going to happen until CPI data is released later today, cheers 🙂
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