One of the decisions that has to be made when you have a put option that ends up in the money. The decision needs to be made whether you want to roll the put or to let it get assigned and sell calls on the shares. There are a couple of things I consider to help me determine which choice to go with.
In many cases you can collect a higher premium from selling a call than you would get from rolling the put out. It also depends on what direction the stock moves on Monday after the assignment of the shares. So for example, if we look at the put option that I currently had open this week on QUBT with a strike price of $16. The share price dropped this week along with almost everything else. When I looked at it on Thursday afternoon deciding if I wanted to roll it or let it get assigned it looked like I could get about a $15 credit for rolling it out another week at the same strike price. The premium on a call for with an expiration date of next Friday was $21. Of course the premium on selling a call will change based on the shorter time frame and even more so based on which direction the share price goes in by Monday morning. If the stock rises we’ll be able to get a higher premium for the call. If the share price drops even more we’ll end up getting a lower premium for the call. So to some degree it’s guessing which direction the stock will go in.
The other thing that I consider is that as long as I have the put I may have the opportunity to roll the strike price lower. Even though you can sell a call with a lower strike price than you bought the shares for, I don’t prefer to do this unless absolutely necessary. So if I feel like the share price will take a long time to recover, I might prefer to roll the strike price further out in time and roll the strike price down and gradually over time roll it down to meet the share price.
Week 28 Results
It was a bit of a rough week for the market overall. Here are the positions that I started the week off with:
Since the market was down at the beginning of the week I decided to wait to do anything to see how things would play out as the week progressed. Overall through the week the market continued to go down because of a few different factors. So on Thursday I opened a new position by selling a put on TSLL with a strike price of $20 and expiration of 11/14 (8 DTE). For this position I was able to collect a premium of $93. By Friday my three expiring puts were all in the money. I decided to let them all get assigned as my hope is that the market will start to make a recovery next week and I can make more in premiums on the calls if that happens. Of course we don’t know which direction the market will go in, but the fact that things went in a good direction in the later part of the day on Friday may be a good sign. Only time will tell.
Here is a list of my trades since the beginning of September:
Summary
So for the week I collected a total of $92.96 in net premiums and ended up with 100 shares each of QUBT, HIVE and SPCE. My target premium for week 28 is $84.51. Total net premiums collected for the first 28 weeks is $2,413.80 and my target premiums for the first 28 weeks is $2,156.97. Of course my actual account value went down some this week due to having to buy shares at above market price. My goal now will be to sell calls while waiting for the price to recover.
Here are snapshots of my account positions which don’t show the assignments yet, but this will be updated by Monday morning. I’m also including my weekly summary as usual.
