As we approach December expiration, the last standard options expiration date of 2010 (excluding Weekly series expiration and the December Q4 Quarterly expiration), PowerOptions’ staff has received several phone calls and emails from customers regarding rolling or adjusting their positions.
This is fairly common heading into any expiration, but a few things in particular stood out for me this cycle when talking with customers: There are circumstances where it might be best to wait to fully roll a position to a new month or to a new strike price. This concept is not new, but it is something that may at times be overlooked as an investor hastily seeks to generate new income or ‘hedge’ the existing position.
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Patience is a virtue, and as investors we should not rush into a bad position just because it is available. That being said, as investors we do not want to forgo opportunities that match our goals and expectations.
A short video below details two Covered Call Positions that were discussed during Coaching Sessions this Week:
Scenario 1: A Covered Call position expiring in December is In-the-Money; the investor does not wish to be assigned.
Scenario 2: A Covered Call expiring in January where the stock has declined, the call option is Out-of-the-Money and the investor is losing value on the overall position.
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In both scenarios, the powerful PowerOptions’ Portfolio tools present potential roll out opportunities; but in both cases the investors might consider waiting to adjust their positions. Click on the video below to see why…
[tags] expiration, rolling, adjusting, strike price, Covered Call [/tags]