Hi Advanced Traders!
Just like last week, we are going to take a breather to see where the market goes because it can be a coin flip right now.
If you did not close some of your spreads early and were assigned 100 shares to cover your second leg, you can consider rolling out your call to collect a larger premium. To do this, you are going to (1) buy to close (BTC) your call option contract and (2) sell to open (STO) another contract for a further expiration date. By doing this, you will be able to collect a higher net credit/premium due to the higher extrinsic value. An expiration date I would choose would be 3-4 weeks out.
If you want to take it a step further and be more conservative, you can even consider buying back and rollout out and down to give yourself a little more downside protection (higher premium) and lower the cost basis of your shares even more.
For example, if you had an AMZN BCS where you had your second leg at $125 and you set your BSO at $124, you can buy back your $125 call option and resell a further expiration call option at the $124 strike. If you are called away, you essentially would be buying the shares at $124 and selling them for the same $124, netting you $0 of capital gains. However, you would net a profit of a couple hundred dollars due to the premiums collected from your sold calls.
Again, always see what works best for you and what fits your risk tolerance.
Feel free to ask me and the team any questions you have!
Happy trading everyone!😀
Steve and the Call to Leap Team
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