Long story short. After selling calls on ENCY and then buying more to dollar cost down I am sitting on 1000 with average cost at 2.97.
Stock currently at 1.65 I was thinking of doing something like this.
buy another 1000 shares to get the average down to 2.31 then selling 20 of the aug 2.50's... if they get called great. If not, thats okay a little more $ in and I will sell them again the next month, and the next
What you think?
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Long story short. After selling calls on ENCY and then buying more to dollar cost down I am sitting on 1000 with average cost at 2.97.
Stock currently at 1.65 I was thinking of doing something like this.
buy another 1000 shares to get the average down to 2.31 then selling 20 of the aug 2.50's... if they get called great. If not, thats okay a little more $ in and I will sell them again the next month, and the next
Is that because it limits the profits too much? I was kind of thinking along those lines that I would be sitting on 2000 shares and if it starts to take off that would suck to only make a little profit.
Is that because it limits the profits too much? I was kind of thinking along those lines that I would be sitting on 2000 shares and if it starts to take off that would suck to only make a little profit.
If you're going to average down the stock to 2.31, then there is no sense in turning this into a covered call position. Aug 2.50c 0.05 bid so it barely covers the cost of commission.
Your return if this position gets called is about 48%. However if we are into August and there is a chance the stock gets called, you can be sure an at-the-money Aug 2.50 calls will be >> $0.05. [I don't have the implied vol so I can't give you an estimated price]
Alternatively you can spend $150 + comm and buy those Aug 2.50 calls. Just remember that it's quite likely those will expire worthless unless the stock rises from the dead. You get a little more bang for your buck but it's probable that it's $175 you won't be seeing again.
If you're going to average down the stock to 2.31, then there is no sense in turning this into a covered call position. Aug 2.50c 0.05 bid so it barely covers the cost of commission.
Your return if this position gets called is about 48%. However if we are into August and there is a chance the stock gets called, you can be sure an at-the-money Aug 2.50 calls will be >> $0.05. [I don't have the implied vol so I can't give you an estimated price]
Alternatively you can spend $150 + comm and buy those Aug 2.50 calls. Just remember that it's quite likely those will expire worthless unless the stock rises from the dead. You get a little more bang for your buck but it's probable that it's $175 you won't be seeing again.
I dont like selling calls for very little, like Logan mentioned the value isnt there..you arent making anything until the stock is closer to strike..
That stock has turned into a longer term project, but averaging down if somthing good happens then you could make a NICE return if you let it work for a longer period of time..
Grinder,
I dont like selling calls for very little, like Logan mentioned the value isnt there..you arent making anything until the stock is closer to strike..
That stock has turned into a longer term project, but averaging down if somthing good happens then you could make a NICE return if you let it work for a longer period of time..
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