Opening (IRA): ARKK May 17th 44 Monied Covered Call
Updated
... for a 43.00 debit.
Comments: High IVR/IV at 52.7/38.7.
Going monied here, buying a Johnny one lot and selling the -75 delta call against to emulate the delta metrics of a 25 delta short put to take advantage of elevated IV on the call side and to have built-in position defense via the short call. This is slightly shorter duration than I like to go (39 DTE), but I also don't have a ton on here, so scrounging around for decent IV underlyings. Cathie also doesn't pay divvies but once a year in December, so there's no point in hanging around in the stock for any period of time.
Will generally look to take profit at 50% max on the whole shebang (stock + short call) and/or roll out the short call if it hits 50% max to reduce cost basis further.
Metrics:
Buying Power Effect/Cost Basis In Stock/Break Even: 43.00/share
Max Profit: 1.00
ROC at Max as a Function of Buying Power Effect: 2.33%
ROC at 50% Max: 1.16%
As previously noted in my other monied covered call posts, this only makes sense in a cash secured environment where you don't get BP relief going short put. On margin, short put will be the most BP efficient.
Comments: High IVR/IV at 52.7/38.7.
Going monied here, buying a Johnny one lot and selling the -75 delta call against to emulate the delta metrics of a 25 delta short put to take advantage of elevated IV on the call side and to have built-in position defense via the short call. This is slightly shorter duration than I like to go (39 DTE), but I also don't have a ton on here, so scrounging around for decent IV underlyings. Cathie also doesn't pay divvies but once a year in December, so there's no point in hanging around in the stock for any period of time.
Will generally look to take profit at 50% max on the whole shebang (stock + short call) and/or roll out the short call if it hits 50% max to reduce cost basis further.
Metrics:
Buying Power Effect/Cost Basis In Stock/Break Even: 43.00/share
Max Profit: 1.00
ROC at Max as a Function of Buying Power Effect: 2.33%
ROC at 50% Max: 1.16%
As previously noted in my other monied covered call posts, this only makes sense in a cash secured environment where you don't get BP relief going short put. On margin, short put will be the most BP efficient.
Trade active
Rolled the May 17th 44 short call to the June 21st 44 for a .94 credit. 42.06 cost basis.Trade active
Rolled the June 21st 44 to the July 19th 44 for a .67 credit. 41.39 break even.Trade closed manually
Closed here for a 41.57 credit, resulting in a small winner (.18), since I can re-up in the same expiry, but with a better break even.
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