Re-estabish Covered Call on QQQ

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:   The June 22 calls expired worthless yielding $.25/contract gain. Last week CCI re-established a covered call position as described below.

 

TRANSACTION DATE: Th. 6/26/13

Action: Expired

Strike: $73

Exp. Date:  June 22, 2013

Price: $0.00

 

Action: Sell to Open

 Exp. Date: July 5, 2013 (out oneweek) 

 Strike: $72

 Price: $0.24

 

Net Credit: $.23/contract  after commissions

Rolled EEM Covered Call Out and Down

The Index Covered Call Trading Plan  (aka: ICC) 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: EEM   

DESCRIPTION: iShares Emerging Market Shares

 

TRANSACTION TYPE:  Roll Out and Down

Emerging market stocks continue their swoon, and hence the June 28 $40.5 options became essentially useless as a hedge.  Late last week CCI closed that call for $.01 and a gain of $.27/contract.  At the same time CCI re-established a covered call as described below. 

 

TRANSACTION DATE: Thur 6/27/13

 

Action: Buy to close 

Exp. Date: June 28, 2013 

Strike: $40.50

Price: $.01

 

Action: Sell to Open  

Exp. Date: July 5, 2013 (one weeks out) 

Strike: $38

Price: $.31

 

Net credit/contract: $.29 after commissions

Closed C Covered Call

As discussed here CCI has a long position in the financial sector etf (xlf) via the Jan 15 $10 Call, that has usually been hedged via a shorter duration short call in Citigroup (C).

Just last week, CCI rolled up and out a covered call in C as a hedge against a long call in the financial ETF XLF.
Since then the C and the market have pulled back. Today, CCI closed the covered call in C for a $.07 debit. CCI will be looking for an opportunity to re-establish this hedge.

As of the close of business the returns related to various related positions are

• Holding the XLF ETF would have returned 10.2%
• The leverage obtained via holding the Jan 15 $10 XLF call would have returned 23.3%.
• The long/short strategy discussed in this thread is up 24.6%.  

This approach continues to achieving its objective of providing leveraged returns with some hedging of downside risks, but still a long way to go. 

Rolled Covered Call in C.

As discussed here CCI has a long position in the financial sector etf (xlf) via the Jan 15 $10 Call, that has usually been hedged via a shorter duration short call in Citigroup (C).


As last discussed here,  CCI was short the June $50 call.  With C trading just under the $50 level  on Wednesday AM prior to this weeks Fed meeting, CCI rolled the call up and out to give more time/price room for potential volatility emanating from the fed actions.  Specifically the June $50 call was rolled to the July 12 $52 call  at $0.0. The A $.25/contract profits was achieved on the June $50 call. Since the time of this trade the market and C and dropped steadily, so this call will likely need to be rolled again fairly soon.

As of the time of this transaction the returns related to various related positions are

• Holding the XLF ETF would have returned 15.3%
• The leverage obtained via holding the Jan 15 $10 XLF call would have returned 36.7%.
• The long/short strategy discussed in this thread is up 32.7%.  

At present, this approach is achieving its objective of providing leveraged returns with some hedging of downside risks, but still a long way to go. 

Rolled SPY Covered Calls

The Index Covered Call Trading Plan  (aka: ICC) 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:  SPY   

DESCRIPTION: SPDRs S&P500

TRANSACTION TYPE: Roll the June June $165 call to the July $164 call

TRANSACTION RATIONALE:  This weeks market sell off created the opportunity to take profits and re-position hedges.  In this case rolling the SPY covered calls as described below.

TRANSACTION DATE: Thur.  June.20, 2013

Action: Buy to Close

Exp. Date: June 22,  2013

Strike: $165

Price: $.06

Action: Sell to Open  

Exp. Date: July 20, 2013  

Strike: $164

Price: $1.54

Net credit: $1.41/contract after commissions.

Covered Call in EEM Re-established

The Index Covered Call Trading Plan  (aka: ICC) 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: EEM   

DESCRIPTION: iShares Emerging Market Shares

 

TRANSACTION TYPE: Emerging market stocks continue their swoon. The June 14 $42 options expired this past weekend generating a $.40/contract gain to somewhat mitigate the loss in the underlying ETF.  CCI re-established a covered call position as described below.

 

TRANSACTION DATE: Mon.  6/17/13

 

Action: Sell to Open  

Exp. Date: June 28, 2013 (two weeks out) 

Strike: $40.50

Price: $.29

 

Net credit/contract: $.28 after commissions

Rolled QQQ Covered Calls Out One Week

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:  A few ups and downs this week in the market, but not too much net change. Hence, time to harvest a little option premium (about $.40 or .5% in a week) and roll out the covered call position in QQQ as described below.

 

TRANSACTION DATE: Th. 6/13/13

Action: Buy to Close

Strike: $73

Exp. Date:  June 14, 2013

Price: $0.07

 

Action: Sell to Open

 Exp. Date: June 22, 2013 (out an additional week) 

 Strike: $73

 Price: $0.34

 

Net Credit: $.25/contract  after commissions

Rolled IWM Covered Call

The Index Covered Call Trading Plan  (aka: ICC) 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:  IWM    

DESCRIPTION: iShares Russell 2000

 

TRANSACTION TYPE: Roll Out and Down

Small cap. stocks pulled back a little over the last weeks after a nice run up.  CCI used this pull back as an opportunity to roll the IWM covered call position as described below.

TRANSACTION DATE: Wed. Jun 12

Action: Buy to close

Exp. Date: June 22, 2013

Strike: $100

Price: $0.23

 

Action: Sell to Open

Exp. Date: July 20, 2013

Strike: $99

Price: $1.37

 

Net Credit/Contract after commissions: $1.09

Apple Call - "Roll on the News"

As discussed here, CCI is long the Apple (AAPL) Jan $300 call as a stock replacement and intends to  write shorter term calls against the position.  CCI's primary thesis is that Apple's low valuation will provide a floor under the stock, but margin pressures from lots of worthy competitors will keep a lid on the stock. Hence, there is a good probability Apple will trade sideways for awhile, and this options strategy would capitalize on that situation.


As discussed  here  CCI's last activity in this position was to sell the June $660 call against the Jan $300 call held in the portfolio. Since that time the stock has drifted mostly sideways (slightly up).  This week Apple is holding its developer conference. CCI has no particular insight into what this conference might mean to the company or its products.  However, these type of events often seem to lend themselves to the old adage "buy on the rumor, sell on the news".  In this case, "roll on the news". The intent of rolling this option position was to

• harvest a little of the option premium gained to date 
• re-establish a covered call that provides a little more risk protection and reward if the stock were to jump up or down based on the perceived outcome of the conference.

Specifically, CCI closed the June $660 call and rolled out to the July 5 (two weeks further out) $665 call. This transaction was done for a $1.34 credit/contract after commissions.  The June $660 call position made a very modest $.61/contract, and the July 5 $665 contract has about $5.70/contract in premium remaining at this time.

If you have been keeping score at home ... Since Mar. 1 when this position was established

• Holding the stock would have resulted in the position being up 4.3% (including dividends)
• Holding the $300 Leap for leverage would have resulted in the position being up 8.0%
• Holding the $300 Leap and rolling calls against that position as described here is up 14.5%

So far...so good, but the reactions to the developers conference will likely impact these results in some manner. Hence, it is likely CCI will adjust the position again in a week or two in anticipation of  Apple's q2 earnings results in late July.

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

Re-established a Covered Call Position in EEM

The Index Covered Call Trading Plan  (aka: ICC) 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: EEM     
 

DESCRIPTION: iShares Emerging Market Shares

 

TRANSACTION TYPE: Roll - Emerging market stocks haven fallen over the past weeks. The May 31 $43.50 options expired this past weekend generating a $.43/contract gain to somewhat mitigate the loss in the underlying ETF.  CCI re-established a covered call position as described below.

 

TRANSACTION DATE: Mon.  6/3/13

 

Action: Sell to Open  

Exp. Date: June 14, 2013 (two weeks out) 

Strike: $42

Price: $.42

 

Net credit/contract: $.40 after commissions