August Option Investing – Covered Calls

As of July expiration, my DRN calls expired ($79 strike price), and my TMF calls were exercised ($82 strike price).

Last week, I noticed that TMF was trading around $86, but the next strike price for calls was $90.  Given TMF was in an uptrend, I decided to purchase 200 shares of TMF in an attempt to capture some capital gains.

The general markets looked soft, fundamentally speaking, and continued to deteriorate (the market entered a correction on Tuesday).

As the trading week opened, I was a bit worried that DRN wouldn’t hold up to the weakness in the general markets.  I was able to sell a call, but DRN flirted with my stop price (<$72) in intraday trading.

TMF started off with a continued rise in price, so I “maxed” out my risk-adjusted position size by purchasing an additional 200 shares.  Unfortunately, only two of my call orders were executed.

By the end of the week the general markets were back in an uptrend (how’s that for a whipsaw).  DRN made its way back in the high 70’s, avoiding my stop loss price.  But TMF dove on Thursday and Friday to ~$85, so now it is dangerously close to a stop level.

ETFs (Owned)

  • DRN – 100 shares @ $78.86
  • TMF – 200 shares @ $86.46

ETFs (Bought)

  • TMF – 200 shares @ $92.26

Calls (Sold)

  • DRN – 1 $75 call @ $2.25
  • TMF – 2 $95 calls @ $2.80
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About T. Knight
Blogging about my journey to financial independence via investing for cashflow.

2 Responses to August Option Investing – Covered Calls

  1. ppc tips says:

    My father loves this kind of stuff. I’d love a book that i could get him for christmas related to this subject.

    • T. Knight says:

      “The Bible of Option Strategies” (Cohen) has a lot of useful information on how to use options (covered calls are just one). I also found the books “Trading for a Living” (Elder) and Trendfollowing (Covel) useful for developing my investing process (invest-safely.com also has a lot of good information on the how to link personal finance and investing)

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