Opened (IRA): QQQ August 19th 321/370 Short Call Vertical
Updated
... for a 1.79 credit.
Comments: I'm fairly certain my June 24th 321 QQQ short put isn't going to finish out of the money with 10 days to go and that I will be assigned shares with a cost basis of 321 minus whatever I've collected in credits so far. For purposes of what will become a covered call, however, I'm using the short put strike as my starting cost basis (321.00) and selling a call against with a cheap long call. Naked calls are generally verboten in an IRA, so buying that cheap long is a sort of temporary workaround until I'm actually assigned stock. (Selling a call against stock you own is permitted, as long as you have at least one lot/100 shares of stock).
Post assignment, the setup will be an August 19th 321 covered call, with a cost basis of 321.00 minus the credit received of 1.79 or 319.21.
Comments: I'm fairly certain my June 24th 321 QQQ short put isn't going to finish out of the money with 10 days to go and that I will be assigned shares with a cost basis of 321 minus whatever I've collected in credits so far. For purposes of what will become a covered call, however, I'm using the short put strike as my starting cost basis (321.00) and selling a call against with a cheap long call. Naked calls are generally verboten in an IRA, so buying that cheap long is a sort of temporary workaround until I'm actually assigned stock. (Selling a call against stock you own is permitted, as long as you have at least one lot/100 shares of stock).
Post assignment, the setup will be an August 19th 321 covered call, with a cost basis of 321.00 minus the credit received of 1.79 or 319.21.
Trade active
Now that it's virtually guaranteed that I'm going to be assigned on the 321 short put, I rolled the August 19th 321/370 to the September 16 321/398 short call vertical for a 2.11 on strength here (since I'll collect more credit than were I to roll on weakness).I went ahead and widened the spread even though the resulting BPE is greater since I'll claw that BPE back after assignment. The broker is treating the spread as a standalone trade with its own risk and accompanying BPE at the moment; that will go away post-assignment since it will now be a September 16th 321 covered call with a cost basis of 317.10/share.
If the long call aspect is worth anything post-assignment, I'll go ahead and close that out (it only cost me .10, so I'm not expecting to claw back much out of it, but $10 is $10).
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.