My calls on YHOO were in the money on Friday so I had 100 shares assigned away from me at $15.00. Looking back I bought these on 6/23/11 for $14.98 so before commissions it’s $0.02 profit… but the last calls I sold netted $113.23 after commission and the calls sold over this year netted $347.04. For the year that’s 23%, for the single sale it’s 7.5% in 5 months. There are several ways I could measure the profit percentage, but these two are probably the most reflective of owning YHOO for the year.
This morning I changed my strategy just a bit from my original plan and sold the YHOO Oct 16.00 calls for $1.00. While I do look at daily gyrations, I try not to let them cloud my judgement too much. I’m looking to close the position somewhere around $0.30 which will require a bump in YHOO’s price or a serious decline in time value or both. If YHOO recovers from this total market decline I might be able to close out of this position quickly, if not I will have to wait until October to see if YHOO trades around $15.70 with no time value on the options. This is a bit riskier plan as I am selling these puts in the money by $0.40, but most of the risk is in the decaying time value.
This is what I’m doing in my own account and is for illustrative and educational purposes only. Do your own research.