Updating the Status of the QQQ Covered Call Position

The Index Covered Call (aka: ICC) trading plan is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

UNDERLYING ETF: QQQ 

DESCRIPTION: Power Shares NASDAQ 100 

TRANSACTION TYPE: Roll

 

DESCRIPTION:  Unfortunately, CCI has fallen a little behind with posts on the QQQ covered call position.  The last post discussed the establishment of the May 3 $69.50 call.  After that position was established, QQQ continued to move substantially higher and CCI let the underlying position be called away.  Since that position was initiated on March 18 until its closure on May 3 it returned 2.25%.  Not bad for seven weeks (about 18% annualized).  Of course this was in an up market, so as anticipated this strategy "made less in an up market".  As often discussed, this strategy should also  "lose less" in a down market and make more in sideways market.

On May 29, CCI re-established the position buying the QQQ at $73.43 and at the same time selling the June 7 $74 call for $.42.  With the market down today, CCI rolled that position out a week, harvesting $.36/contract (just under .5%).  Specifics of the last transaction are shown below.

 

TRANSACTION DATE: Th. 6/6/13

Action: Buy to Close

Strike: $74

Exp. Date:  June 7, 2013

Price: $0..05

 

Action: Sell to Open

 Exp. Date: June 14, 2013 (out an additional  week) 

 Strike: $73

 Price: $0.53

 

Net Credit: $.45/contract  after commissions