December Expiration
The expiration of our December covered calls is today, and I’m happy to report that four positions (GM, PINS, YETI, CGC) are closing for max profits ranging from 7.69% to 12.15%, while our one trade that went sideways in November (MRVL), I was able to adjust, and turn into a respectable yield of 3.44%.
Below are the details/profits from each trade… though the headliner is that unless there is a dramatic stock/market move today, you won’t need to adjust any of these positions, and come Monday, you will be without a stock or option position in each.
Let’s start with MRVL, which was an interesting trade for the CPB portfolio. To recap, we originally bought the stock at 43.7, and sold the November 44 call for $2.30.
Following our buy, MRVL made a large acquisition of semiconductor peer Inphi (IPHI), which sent MRVL stock as low as 36, and well below our stop.
However, I made the executive decision to “break” our stop, as the deal was the driver of the stock decline, and oftentimes in these situations, in the weeks that follow, the acquirer’s stock rebounds. This turned out to be the right move.
However, into that stock decline, I did adjust our position by buying back the November 44 call for $0.10, and then selling the December 42 call for $0.90. Essentially, I held on to the trade, and lowered our cost basis.
Today the stock is trading at 47, and we will walk away with a profit of $140, or a yield of 3.44%.
This trade was not easy, and I “broke” my stop rule, but it worked out well in the end.
Moving on to our “easier” trades…
General Motors (GM): Bought stock at 35.30 and sold the December 36 call for $2.25.
With the stock trading at $42 we will walk away with our profit of $295 per covered call, or a yield of 8.93%. You do not need to adjust this position and come Monday we will not have a stock or option position in GM.
Pinterest (PINS): Bought stock at 58.50 and sold the December 60 call for $5.00.
With the stock trading at $71, we will walk away with our profit of $650 per covered call, or a yield of 12.15%. You do not need to adjust this position and come Monday we will not have a stock or option position in PINS.
Yeti (YETI): Bought stock at 51.5 and sold the December 52.50 call for $2.75.
With the stock trading at 72.5, we will walk away with our profit of $375 per covered call, or a yield of 7.69%. You do not need to adjust this position and come Monday we will not have a stock or option position in YETI.
Canopy Growth (CGC): Bought stock at 24.90 and sold the December 25 call for $1.90.
With the stock trading at 26.25, we will walk away with our profit of $200 per covered call, or a yield of 8.7%. You do not need to adjust this position and come Monday we will not have a stock or option position in CGC.