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Coveredcalls

FOR 45 DTE SETUPS, ROTATING INTO ETF'SSometimes life just plain ass gets in the way of your trading ... . Starting October 1st, my "number's up" for jury duty for the entire month of October. I may be called to serve any time during this period, sit for a lengthy period of time in a room, and then be excused because the parties have reached a last minute agreement or I may have to sit through an actual trial that goes on fairly continuously for a week or two. In sum, there's no way to plan your day, your week, or, really, your month ... . Since I don't think the environment will be very conducive to trading (even assuming I could do that effectively on my phone or iPad), I'm going to go with trading low key setups that I don't need to keep an eye on, as compared to, for example, short strangle earnings trades with short DTE. As of Friday close, there are several >35% ETF's I have eyeballs on -- GDX (gold miners), XME (miners), EEM (emerging markets), EWZ (Brazil), and XBI (36.1). Most of these are, in the scheme of things, "fairly cheap," so I may go covered call rather than with an options strategy that has a clock on it (i.e., spreads, strangles with "date certain' expiries). Naturally, we have the "FOMC dance" coming up, so I may hand sit out this week until the tsunami of media spin, speculative positioning and such, passes ... .
AMEX:GDX
by NaughtyPines
WITH VIX SUB-15, PREEM SELLING OPPS ARE OUSTIDE BROAD INDICESAs I've posted several times before, my preference generally is to (1) sell premium in broad-based index instruments (e.g., SPY, IWM, QQQ, SPX, RUT) if VIX > 15; and (2) if VIX < 15, look for premium selling opportunities in non-index exchange traded funds with implied volatility of >35% and/or individual underlyings with implied volatility of >50% and where the implied volatility percentage is in the 70th or greater percentile for the preceding 52-weeks. Unfortunately, VIX <15 here and underlyings -- whether exchange traded funds or individual underlyings -- with implied volatility both in the 52-week 70th percentile and above 50% implied volatility are absent here. Consequently, I am "settling" for mere >50% implied volatility plays in exchange traded funds and in individual stocks. This isn't ideal, but I'm playing these small, keeping quite a bit of powder dry in the event that volatility does pick up at some point in the weeks ahead. There are some opportunities out there, and they're where they've been for the past several weeks: in gold, miners, oil and gas, and biotech. The top IV individual stocks with liquid options are: NVAX (195.0) (biotech); RTRX (132.4) (biotech); GNW (100.3) (financial); WLL (80.5) (O&G); CLF (76.1) (iron ore/mining); AG (75.6) (silver miner); CHF (73.9) (oil and gas); AKS (70.0) (steel); EGO (62.7) (gold miner); VRX (61.9) (biotech); AMD (61.8) (semiconductor); and AUY (61.6) (gold miner). The top IV exchange traded funds are GDX (43.7) (gold miners); and XME (39.2) (mining). And, because of the "smallness" of many of these underlyings (many are under $10), I'm taking a slightly different strategic tack here, either doing covered calls from the outset or selling puts as a precursor to a covered call, the notion being in the later case to either keep the premium or get put the stock at a lower price, after which I'll sell calls against. Things like short strangles and iron condors simply will not yield enough premium on setup to bother with in most of these smaller stocks. In the one play that I currently have on in XME (see post below) that I could have strangled, I opted to just naked short put to leave open the option of covered calling it if I get put the stock or rolling the short put down and out for additional duration and credit should the underlying move that way rather than dealing with the hassles of call side risk. Naturally, these options would still be open to me were I to strangle, but doing just the short put relieves me of call side risk (there's always trade-offs). For me personally, I'm looking to move into plays involving something other than gold, miners, or oil and gas, since I have quite a few of those on already. Unfortunately, this makes for pretty slim pickings in my little list, with the potential focus being on AMD and (ick) VRX. I'm already in NVAX and GNW, and I'm not fond of RTRX (it only offers monthlies and currently the Oct monthly expiry only offers 2 1/2 wide strikes; naturally, that may change ... ).
TVC:VIX
by NaughtyPines
HIGH IMPLIED VOLATILITY OPTIONS (8/28)One of the first things I do when searching for either covered calls to do or just general premium selling plays is to look for high implied volatility underlyings with relatively decent expirations, strike widths, and fairly tight spreads (i.e., having weeklies is best with $1 wide strike widths and a bid/ask that is no more than .15 wide from top to bottom is ideal, although I'll bend those rules from time to time; $TWLO's a good example of this, nasty wide spreads, but premium too juicy to pass up). After I identify those, I start looking at actual plays to see if I can make something out of them, looking at all possible premium selling strategies -- short nakeds, short straddles/strangles, credit spreads, iron condors, etc. Here's today's lists of stocks, sector exchange-traded funds, and broad-market exchange traded funds, ranked by their implied volatility percentage: Stocks RIGL 219 (biotech) (in a trade), NVAX (biotech) 185 (in a trade), GSAT (telecomm) 152, TDW (O&G) 117, SDRL (O&G) 93, MX (semicon) 78, CHK (O&G) 78 (in a trade), GLNG (solar) 76, CLF (mining) 75 (in a trade), WLL (O&G) 73 (in a trade), CDE (mining) 72, HL (gold/mining) 70 (in a trade), GNW (financial) 69, LC (financial) 65, VRX (biotech) 62, AUY (gold/mining) 60, AMD (semicon) 60, NE (O&G) 60 (in a trade). Sector Exchange-Traded Funds GDX (gold miners) 42, XME (mining) 38 (in a trade), XBI (biotech) 36, XOP (O&G) (33). Broad Market Exchange-Traded Funds EWZ (Brazil) 34.6, EEM (Emerging Markets) 21.4, IWM (Russell 2000) 18.5, QQQ (Nasdaq) 15.7, EFA (Word, ex. US/Canada) 14.4, SPY (S&P) 14, DIA (DJIA) 13.5. Notes: The $RIGL play posted here is the play I'm in. It's not currently workable except possibly as a naked 2.5 short put play due to strike width -- 2.5, 5.0, etc.
NASDAQ:RIGL
by NaughtyPines
2
BUYING POWER EFFICIENCY: "POOR MAN'S" VS. TRAD COVERED CALLSThere is more than one way to skin a cat. But some ways are more buying power efficient than others ... . Here, I'm looking at a covered call in X. The implied volatility is >50%, so I can get a bit of premium on the call side to reduce my cost basis in any stock I buy here. For example, if I buy shares at 20.38, and sell the Sept 30th 20.5 call against (for a 1.50 ($150) credit at the mid), I can get into the whole package for a 19.03 debit ($1903), my cost basis in the shares will be $19.03 per share, and my max profit is $147 if called away at 23. However, for some, that $1903 stick price can be hefty, especially if they're working with a smaller account. The drawback is that I'm (a) stuck with stock I bought at 20.38 per share; and (b) the buying power effect may be larger than I'd like. In comparison, I can also do a PWCC or poor man's covered call. Traditionally, this is set up using a long-dated, deep ITM long call option to stand in for the stock and -- like the covered call -- a call sold 30-45 DTE. Most of the time, I set these up using the 70 delta strike for the long option and the 30 delta strike for the short. As with the traditional covered call, I'm looking to reduce my cost basis in my "synthetic stock" (here, the long option) by selling calls against. Compared to the traditional covered call, the PWCC has a smaller price tag -- $361 (which is also my max loss for the setup, assuming I do nothing at all), and I look to exit the setup as a whole at 10-20% of what I paid for the setup which, in this case, isn't as attractive as the $147 max profit of the covered call. However, there is one other aspect of the setup worth noting -- my buying the Jan 20th 18 call gives me the right to exercise for shares at $18. With the covered call, I'm locked in with 20.38 shares; with the PWCC, I'm not.
NYSE:X
by NaughtyPines
NEXT WEEK'S COVERED CALL CANDIDATES: NE, CLF, AMD, WLL, OASHere are my candidates for covered calls next week. Right now, they're based solely on ROC metrics, the key being to get at least a 10% ROC if the shares are called away at the short call strike. Additionally, the focus is on sub 10.00 debit plays; underlyings of higher dollar value are generally more amenable to other strategies. After looking at the charts, as well as doing some due diligence on the companies, I'll cull the herd ... . $NE (O&G): Buy shares at 6.21; sell the Sept 30th 6.5 call; 5.85 db; $65 max profit (11% ROC). $CLF (Mining): Buy shares at 6.09; sell the Sept 30th 6.5 call; 5.75 db; $75 max profit (13% ROC). $AMD (Semiconductor): Buy shares at 7.62; sell the Sept 30th 8 call; 7.21 db; $79 max profit (11% ROC). $WLL (O&G): Buy shares at 8.04; sell the Sept 30th 8.5 call; 7.36 db; $114 max profit (15.5% ROC). $OAS (O&G): Buy shares at 10.27; sell the Sept 30th 11 call; 9.84 db; $116 max profit (11.8% ROC).
NYSE:NE
by NaughtyPines
2
NEXT WEEK'S COVERED CALL CANDIDATES: ZIOP, NVAX, LC, WLLHere's my "short list" for covered call candidates for next week generated by looking at Barcharts.com high volatility stock options list and the Dough grid: WLL buy shares at 7.66; sell Sept 16th 8 call; 7.10 debit; $90 max profit (12.7% ROC) CC buy shares at 11.45; sell Sept 16th 12 call; 10.78 debit; $122 max profit (10.6% ROC) LC buy shares at 5.40; sell Oct 21st 5.5 call; 4.85 debit; $65 max profit (13.4% ROC) ZIOP buy shares at 5.46; sell Oct 21st 6 call; 4.65 debit; $135 max profit (29.0% ROC) NVAX buy shares at 7.04; sell Oct 21st 8 call; 5.42 debit.; $258 max profit (47.6% ROC) FCX buy shares at 11.92; sell Sept 30 12 call; 10.90 debit; $102 max profit (9.3% ROC) JCP buy shares at 10.55; sell Sept 30th 11 call; 9.59 debit; $96 max profit (9.6% ROC) Notes: (1) WLL's a petro play. Because so many small petro companies are in trouble of one kind or another (i.e., shale and/or offshore oil exploration exposure), I generally prefer playing something with a little less "single company exposure" (e.g., XOP). But, hey, it meets my general rule of >10% ROC. (2) CC is a basic materials/chemical play. It spun off from DuPont and has had quite an up run here in spite of a recent punitive damages judgment for chemical dumping (weirdly, the stock dipped and then subsequently popped on the news, probably out of relief that the debacle was in the rear view mirror). (3) LC's been in a downtrend since IPO. At best, a money, take, run play. (4) I still like ZIOP. It's biopharma and has a fairly diverse pipeline such that if one drug fails, they still have more in the hopper. And that 29% ROC, well ... drop dead gorgeous if it can get to $6. (5) I'm also in NVAX (biopharm). In comparison to ZIOP, their pipeline is quite narrow and currently devoted to a single vaccine (RSV). sg.finance.yahoo.com (vaccine "could be breakthrough," but not time to "break out the champagne" (code for "it could suck ... or not")). (6) FCX (mining). I covered called this in late 2015, early 2016 which commodities were at a cyclical low and then bailed out when it appeared to be topping. Looking back, it kind of looks pricey here in comparison, and I'm not so hot on the ROC. However, it's highly liquid, and it has some room to pop to 14.00 resistance (and naturally some room to cave; the 2016 low is sub-$4). (7) JCP. Well, it's JCP. Plus, it's had a bit of a run up here, and if past performance is indicative of future results, well, it could zombie trade back to sub-$9 and with the ROC, well, not at the top of my list ... .
WLong
by NaughtyPines
THREE COVERED CALL IDEAS: WTW, NVAX, AND FEYE(?)WTW: Buy at 10.56/share; sell Sept 16th 11 call; 9.27 debit at the mid; max profit $173/contract (18.7% ROC). NVAX: Buy at 7.51/share; sell Sept 16th 8 call; 6.01 debit at the mid; max profit $198/contract (32.9% ROC). (I'm already in a similar NVAX trade .. ). FEYE: Buy at 13.95/share; sell Sept 16th 14 call; 10.67 debit at the mid; max profit $333/contract (31.2% ROC). The reason why I put a question mark next to the FEYE is that it's still gyrating about post-earnings and the pricing on the short call is unlikely to be accurate (it will change at open). So this may not be nearly as sexy at NY open as it looks to be right now ... .
WLong
by NaughtyPines
NEXT WEEK'S "SHOPPING LIST" -- FEYE, ANFI, FIT, RTRX, MCRB(?)With broad market volatility abysmally low (VIX <12), it's a game of hunt and peck for "diamonds in the rough" in terms of premium selling. For the most part, I'm looking for sub-$20 underlyings here with high implied volatility for either selling naked puts (bullish assumption) or initiating covered calls where the purchase of the stock, combined with selling the first out-of-the-money call 30-45 DTE, will yield at least a 10% ROC if the stock is called away at the short call strike. The reason why I'm sticking with particularly low priced underlyings is (a) I don't want to tie up a bunch of buying power on these short-term (basically) engagement trades; and (b) don't want to take a lot of risk on dollar and cents wise. The max loss you can experience with an outright stock purchase, a covered call, and/or a naked short put is the risk associated with the stock going to "0"; less room to fall equals less room for loss. Additionally, the reason why I'm going covered call/naked short put over a short strangle/iron condor (my standard go-to's) is because you simply cannot get enough premium out of a short strangle or iron condor to make doing those on these low-priced underlyings worthwhile with those kinds of setups. With all that background in mind, here's what I'm looking at: FEYE: It announces earnings in a few days here, but the metrics are good enough to either go naked short put or to just dive right into a covered call. (Covered Call: 100 shares at 17.42; Sept 16th 18 short call for 1.54 credit; whole package, 15.95 debit; max profit 2.05 ($205); ROC 12.85%; Sept 16th 16 short put: 1.05 cr at the mid). ANFI: I've never played this little specialty foods company before. (Covered Call: 100 shares at 7.11; Sept 16th 7.5 short call for .75 credit at the mid; whole package, 6.70 debit; max profit .80 ($80); ROC 11.94%). This isn't the most liquid thing in the world, so whether the package is as "sexy" as it is in the off hours remains to be seen. FIT: This is a one trick pony, and I generally don't like one trick ponies; nevertheless, I'm glad to ride a one trick pony for a little bit if the premium is there. (Covered Call: 100 shares at 13.66; Sept 16th 14 short call for 1.23 credit; whole package 12.37; max profit 1.63 ($163); ROC 13.18%). RTRX: Another high volatility biopharma stock. I'd rather be put at $12 a share than $15, but the underlying is afflicted with odd-ball, $2 1/2 wide strikes to work with, so it's either 12.5 or 15 short put, if you decide to take that path. (Sept 16th $15 short put goes for 1.52 ($152) at the mid; Covered Call: 100 shares at 17.93; Sept 16th 20 short call for 2.30; whole package: 16.20; Max Profit: 3.80 ($380); ROC 23.5%). Unfortunately, the first short call strike above current price is at 20, so the underlying will have to move from 17.93 to 20.00 for you to get called away, so this might be a longer term sort of play than the others due to the short call's distance from current price. MCRB: This thing has tanked mightily, due to lackluster trial data on one of its drugs. There are other drugs in the pipeline, but the question is whether its losing some 70% of its value on Friday is a buying opportunity or the start of a long death spiral. Currently, I'm unable to get pricing on puts below the underlying's current stock price, so I'll have to take a look at it at market open.
F
by NaughtyPines
2
EFA: PULL THE TRIGGER AT 51 OR WAIT UNTIL 45.50?One of the other brutalized issues post-Brexit is EFA, which is basically "everyone" besides Canada and the U.S. Here, the point at which I would consider a buy for my covered call portfolio is subject to change, depending on what happens at 51, which is the 50 Fib from the 2009 to the 2014 high. That would not be a bad buy area, but obviously lower is better and if it's going to express fragility at the 50 Fib by breaking through that level precipitously, well, then, I don't want to pull the trigger there ... . Another one to set an alert on for 51, at which time I'll check the chart to see what's goin' on ... . Sidenote: For EFA, you can actually get pretty decent money for just selling the 51 put (currently priced at 1.11 in the Aug monthly expiry) if you want to shoot for assignment at that price level ....
AMEX:EFALong
by NaughtyPines
UNG -- COVERED CALL IDEATruth be told, I was burned somewhat by UNG this year, as I was expecting a seasonality bounce which has not come due to mild temperatures associated with El Nino. Moreover, in 20-20 hindsight, a debit spread was probably not the way to go due to inflexibility of the setup if you are just totally directionally wrong or if your timing as to the directionality is off. In any event, and although volatility in the underlying has diminished somewhat since the making of a significant low around 7.00, there remains sufficient volatility in UNG to go covered call here. The setup: 100 Shares UNG at 7.69 1 Feb 19 8 Short Call Entire Package: 6.91 debit (meaning your break even for the setup is $6.91/share, excluding fees commissions) Max Profit: $109 (if called away at $8) Tips: Look to take off the entire setup in profit before expiry if profit approaches what you would get if called away. Roll out the short call to a later expiry if it is nearing worthless; look to roll to a strike that at least exceeds your cost basis in the underlying.
AMEX:UNGLong
by NaughtyPines
CHK COVERED CALLS (LONG NATGAS PLAY)Okay, so my long UNG play didn't work out; after I entered the trade, NGAS continued to tank -- horribly, as forecasts for a mild winter came to the forefront and natty gas reserves continued to build to record levels. Ugh. Nevertheless, i still want a natty gas long play. CHK is the most beaten down price-wise of the top ten nat gas producers, so it makes for a potentially cheap covered call play that offers a little bit more flexibility in terms of "working off" an error in timing the entry. So, I'm diving in here, with the full expectation that this could dive further, in which case I will continue to sell short calls against the long stock position: 100 Shares CHK at 4.47 Sell Feb 19 5 Short Call (.55 credit at the mid price) $388 for a mid price fill (i.e., cost basis in the 100 long shares will be reduced to 3.88/share).
CLong
by NaughtyPines
MRO -- COVERED CALL IDEAWith an implied volatility rank of 98 and an implied volatility of 79, MRO presents a good covered call opportunity here with a return on capital of greater than 10% if called away at the nearest short call strike (13). Here's the setup (which, as always, may require tweaking after NY open, since these off hours quotes have a tendency to have wide bid/asks): Buy 100 shares MRO at 12.59 Sell 1 Feb 19 13 short call Entire Package 11.20/contract ($1120) Max Profit: $180 (if called away at $13) Notes: A word of caution is in order here with this one. The universe of downtrodden oil and gas plays is quite large and is growing (for obvious reasons). finance.yahoo.com This company -- along with a bunch of others in the sector and, in particular, those exposed to oil/shale sands operations (this one is) -- may continue to trundle into the dirt. Moreover, earnings is right around the corner (on 2/17) and they, in all likelihood, are going to continue to disappoint. Their last profitable earnings quarter was for the period ending 8/20/14 and the only bright spot has been that, for the last couple of earnings, earnings did not disappoint as much as expected ... .
NYSE:MROLong
by NaughtyPines
1
CHEAPER WAYS TO PLAY GOLD -- GDXJ/GDXFor the longest time, my go-to to play gold is GLD, which is intended to emulate the price of gold bullion. However, this can tie up a disproportionate percentage of buying power due to the price of the underlying. Naturally, there are alternatives out there to GLD that are either ETF's (like GDXJ and GDX) or outright securities in companies that acquire, develop, and operate precious metals properties (e.g., AUY, GG, AEM, KGC, ABX). Although some of the individual names are better than others, they all seem to be struggling to varying degrees in this market, and it is possible that some of them will not survive bullion's downturn from the atmospheric highs gold experienced in late 2011. Because of this possibility, I would opt going for an ETF over an individual name in this sector to reduce the risk that taking a position in an individual name entails (i.e., total implosion; AUY comes to mind). Neither a GDX short strangle nor a short straddle will yield much premium here. Selling a naked short put at the edge of the expected move to the downside in the underlying (around the 12.5 strike for the Feb 12th weekly) will yield about $30 in premium/contract; not that great a figure after fees and commissions are considered. Additionally, doing a covered call here isn't quite up to my standards, since a Feb 19 covered call setup with a short call at 14 would only yield a max profit of $99 if called away with a $13.01 per share cost basis ($99/$1301 < 10% ROC). The best thing to do is probably wait for higher volatility in the underlying to make a play (it's below the 50th percentile right now for the past 52 weeks), since this will make premium richer for a covered call setup. Right now, then, good for the watchlist as an alternative to a GLD trade going forward ... .
AMEX:GDXLong
by NaughtyPines
AA -- WATCH FOR VOLATILITY POP AROUND EARNINGSI have not played AA for it seems like eons. This is because my go-to, premium selling play for earnings is the short strangle, and you won't get sufficient premium out of a low priced underlying like AA via short strangle for the life of you. The other option, naturally, is a short straddle , but even then it's a slog to squeeze sufficient premium out of the setup to make it worthwhile. However, given where AA is at in its trajectory (another beaten down commodity/basic materials play), it's literally begging for a covered call at some point. But those are best put on when volatility in the underlying is high, since volatility enrichens premium in the short call of the setup and reduces your cost basis to a greater degree. Consequently, what I'm watching for is a volatility pop around earnings such that doing a covered call with a short strike slightly above current price is worthwhile (a dip like we had last post-earnings would also be helpful). It's frankly not horrible right now, but I generally look to put these on when implied volatility rank is above 70 and the setup will yield 10% return on capital if called away at the short call price of the setup. A 100 @ 9.87/Feb 19th 10 short call will cost 9.13 to put on with a max profit of .87. Could be better, naturally.
NYSE:AALong
by NaughtyPines
OPTIONS TIP -- ROLL YOUR COVERED CALL SHORT UP, EVEN IF ITMI recently set up a covered call in UNG, with the short call strike at 8.00 (Feb 19 expiry). Price has hurriedly broken my short call strike and is "in the money." What do I do now? One option is to do absolutely nothing. After all, my expectation when I put on the setup was to get called away at 8.00 at expiry or take the whole setup off in profit prior to that, so all is fine and dandy from that perspective. Nevertheless, I am not one to pass by potential, additional opportunities in a setup that has gone better than planned, so one thing I should at least look at is whether I can roll the short call up to a higher strike for an additional credit such that my "call away" price is better and my cost basis in my underlying is reduced even further. Depending on how I feel about the trade and whether I can get a credit for the roll, I can either roll to a higher, in the money strike, or to one that is out of the money (with the important point being getting an additional credit; if you can't do that, don't roll). In this particular case, there's not much I can do that's sensible at this moment in time. The only expiration in which I can both improve the short call strike (to 9) and receive a credit for it (an additional .40) is the Jan 2017 expiry, so I'm going to watch and wait on a potential roll more toward expiry, at which time some weeklies might become available that would have half strikes to use (e.g., 8.5). After all, getting called away at 8.5 beats getting called away at 8.00 ... .
AMEX:UNGLong
by NaughtyPines
JCP COVERED CALLWith an implied volatility rank of 96 and favorable break even metrics for the setup, JCP presents a fairly decent covered call opportunity here. Buy 100 shares JCP at 6.63 Sell 1 Jan 29th 7 short call Entire Package: 5.94 debit ($594) (which will be your per share break even -- $5.94, which is slightly above the 52-week low) Max Profit: $106 (if called away at $7) I look to take these off intratrade if the profit exceeds what I would make if called away; otherwise, I continue to sell short calls against (or roll the short call when its value reaches near worthless) at strikes at or above cost basis break even.
JLong
by NaughtyPines
HUN COVERED CALL IDEAHUN (basic materials) currently has an implied volatility rank of 64 and an implied volatility of 60, and the premium to the call side for slightly out of the money calls is sufficiently rich to lower the cost basis in a long stock position to a favorable break even metric (Feb 19 12 short calls currently .77 at the mid price). Here's the basic setup: 100 HUN long shares at 11.41 1 Feb 19th short 12 call Entire Package: 9.72 ($972) (making your break even at 9.72/share, excluding fees/commissions) Max Profit: $228 if called away at $12 Notes: Naturally, I'm looking at off hours prices here with wide spreads on the underlying and on the short call, so you'll no doubt want to reexamine the setup come Monday NY open.
NYSE:HUN
by NaughtyPines
MW -- COVERED CALL IDEAMW (retail/clothing) has had an absolutely brutal year, with its price-per-share shirt literally ripped off its back, plummeting from a high of $66.18 in June down to its current value just north of $15. With $1.00+ in premium to be had on the call side for the Feb 19th 16 call, it may be worth initiating a covered call here. 100 Shares MW at $15.05 1 Feb 19th 16 short call at $1.03 Entire Package: $1401 (break even at $14.01/share) Max Profit: $199 (if called away at $16) Notes: I looked at going a little bit farther out in time than usual to capture some additional, cost-basis reducing premium here, but it doesn't seem like you necessarily get a lot for that. The March 18 16 short call currently goes for 1.45 at the mid price (.42 more than the Feb 19th), but I generally prefer to keep the short calls in closer in time, since it allows for additional flexibility in rolling for additional credit, particularly if the underlying continues to collapse. An added drawback to this play is that the underlying does not have weeklies, so you can't get into a 15.5 short call (which would be preferable).
MLong
by NaughtyPines