May Expiration
The expiration of our May covered calls is this Friday, and several of our positions are trading below the strike price of our covered call options (CLF, LEVI, HOG), though it’s a close call, and a totally fine situation. If these stocks close tomorrow below the strike, the calls will expire worthless, and we will keep 100% of the premium sold. In that case you won’t need to act, and early next week we will most likely sell those stock positions and move on.
Two others are a closer call (GT, MTDR) but could be called away depending on how the stock closes Friday.
With these stocks and the overall market in flux right now, a lot depends on market direction today and tomorrow to determine the profits we will achieve.
Big picture, we are doing well with all positions, you won’t need to act on any stock or options tomorrow, and we will see where we stand Monday.
Here are the details/profits from these trades.
Cleveland-Cliffs (CLF): Bought stock at 18.55 and sold the May 20 calls for $1.40.
With the stock still trading at 18.55 our call is likely to expire worthless, resulting in a profit of $140 per covered call, or a yield of 8.16%. You do not need to adjust this position and come Monday we will likely sell CLF stock.
Goodyear Tire & Rubber (GT): Bought stock at 17.40 and sold the May 18 call for $0.70.
With the stock trading now at 18.79 we are likely to have our shares called away, resulting in a profit of $130 per covered call, or a yield of 7.78%. However, much depends on GT price action today and tomorrow. If called away, you do not need to adjust this position and come Monday you will not have a GT position.
Levi Strauss (LEVI): Bought stock at 28.30 and sold the May 29 call for $0.75.
With the stock now trading at 26.86 our call is likely to expire worthless, resulting in a profit of $75 per covered call; however, we would be at a loss on our stock position. Again, this is a very close call and the outcome depends on today and tomorrow’s trading. But if the call expires worthless, you will not need to adjust this position and come Monday we will likely sell LEVI stock.
Harley-Davidson (HOG): Bought stock at 48.85 and sold the May 49 call for $1.80.
With the stock now trading now at 48.44 our call may/may not expire worthless, resulting in a profit of $180 per covered call. Again, this is a close call, but if the options do expire worthless, you do not need to adjust this position and come Monday we will likely sell HOG stock.
Matador Resources (MTDR): Bought stock at 26 and sold the May 27.50 call for $0.90.
With the stock now trading at 28.2 we are likely to have our shares called away, resulting in a profit of $240 per covered call, or a yield of 9.56%. If so, you will not need to adjust this position and come Monday we will not have a MTDR position.
Circling back, how these covered call positions/situations will play themselves out is anyone’s guess. The market, and sector rotation in particular, continues to be fierce.
Regardless, we will evaluate where we stand Monday morning.