YHOO Covered Calls
I closed out my Yahoo April $16.00 calls @ $0.87. I sold the calls for $1.50. Net of commissions I’m at a 42% gain. I’ve entered a new limit order to sell the April $15.00 call for $1.50. If that sells, an order to buy it back at $.75 gets entered. Before commissions that order is a 100% return if it gets entered and then closed out.
There are (at least) three potential outcomes if the April 15c sells:
- The second order never executes and I keep the $1.50
- The second order executes and closes me out at 100% gain (minus commissions)
- YHOO closes above $15.00 and I have to deliver the shares. (And I keep the $1.50)
If this happens I will look to sell the $13.00 or $14.00 puts.
Disclosure: I’m long YHOO, selling covered calls.
The April 15 calls hit $1.50 so I sold. My account let’s me place contingent orders so once that order was executed the order to buy them back @ $.75 was entered.
Time to sit back and enjoy the ride.
Comment by site admin — 1/27/2012 @ 5:59 pm
Current pricing on YHOO is well over $16.00 so it’s very likely that my 15 calls will be assigned.
Comment by site admin — 2/10/2012 @ 5:22 pm
Bad news on YHOO yesterday slammed the price down to a low of $14.92 with a pop back up to the $15.30 range. The April 15 calls lost about $0.60 to close right around $1.00. The options are still heavy on time value. I actually had adjusted my closing price to $.60 to account for commissions on the trade, but with YHOO looking like it was headed nowhere but up, I didn’t think I would buy the options back. If the price hangs here for a while the options price will eventually float down to intrinsic value (about $0.30).
Comment by site admin — 2/15/2012 @ 7:30 am