I think I speak for us all when I say, the last month was tough!...

I think I speak for us all when I say, the last month was tough!

So to recap off my previous example, I bought shares in this US ETF at $17.77 (last traded at $16.43) so I am down $1.34 on my stock (or 7.5% on my investment).  Compare that to an investment in OOO over the same timeframe which was $25.10 originally and is now $23.00 so this has declined by 8.3%  (let’s just say that it has declined by an equal amount).

But what I have not taken into account yet is the call options that I have sold have given me substantial income of $1.24 per share, which equates to 6.9% on my investment.  Add the two together, a loss of 7.5% on my shares, a positive 6.9% return from calls and I end up with a negative return of just 0.6%!  That is much better than just sitting and holding OOO!

As the price is well below $19.00, no-one chose to take my stock from me so the previous contract expires and it’s now time to set a new one.  As the price has declined so far, I am thinking of changing the strike price of my option to $17.00 for April (26 days) and this time, I shall receive ANOTHER, call it $0.55 per share or 3.1% on my original investment.  Screenshot below.

So by entering this contract, I am agreeing to potentially sell my stock at $17.00 (remember I bought it at $17.77).  Even if I end up selling for a capital loss, I will still make a profit overall because of all the income I have collected!  So this is what I consider a trade gone bad and I am still pulling in reasonable money each month by selling call options and still on track to squeeze out a good profit.

I think that by now I have made my point so I am going to leave it at that going forward as it takes too much time & effort putting all this together. Over to the rest of you...