As NYX broke out over $30 on the first trading day of the year, sold $30 Jan calls against the position at $.77 after commissions.
Break out - Perhaps the stock has broken out, and will stay well above $30 for the next three weeks. In this event, and the stock will be assigned at $30 in three weeks. We will be comfortable with what will have been a $1 or 3.4% capital gain, $.77 or $2.6% on this option position plus another 1% dividend and 1% from prior option play for a total return of 8% in about 2 months (or approx 50% annualized)
Pull back - It is of course equally likely the stock will pull back towards $30 sometime this month, the plan is to cover these options when over a 1% gain is achieved via a combination of the price slippage and time decay. That will have lowered the break even point for this position to just above $28
Next catalyst is the Feb 8 earnings. Re-evaluation of the position will be required before that catalyst under either scenario.
No comments:
Post a Comment