Opening (IRA): ARKK May 17th 44 Monied Covered Call
... for a 43.00 debit.
Comments: High IVR/IV at 52.7/38.7.
Going monied here, buying a Johnny one lot and selling the -75 delta call against to emulate the delta metrics of a 25 delta short put to take advantage of elevated IV on the call side and to have built-in position defense via the short call. This is slightly shorter duration than I like to go (39 DTE), but I also don't have a ton on here, so scrounging around for decent IV underlyings. Cathie also doesn't pay divvies but once a year in December, so there's no point in hanging around in the stock for any period of time.
Will generally look to take profit at 50% max on the whole shebang (stock + short call) and/or roll out the short call if it hits 50% max to reduce cost basis further.
Metrics:
Buying Power Effect/Cost Basis In Stock/Break Even: 43.00/share
Max Profit: 1.00
ROC at Max as a Function of Buying Power Effect: 2.33%
ROC at 50% Max: 1.16%
As previously noted in my other monied covered call posts, this only makes sense in a cash secured environment where you don't get BP relief going short put. On margin, short put will be the most BP efficient.
Comments: High IVR/IV at 52.7/38.7.
Going monied here, buying a Johnny one lot and selling the -75 delta call against to emulate the delta metrics of a 25 delta short put to take advantage of elevated IV on the call side and to have built-in position defense via the short call. This is slightly shorter duration than I like to go (39 DTE), but I also don't have a ton on here, so scrounging around for decent IV underlyings. Cathie also doesn't pay divvies but once a year in December, so there's no point in hanging around in the stock for any period of time.
Will generally look to take profit at 50% max on the whole shebang (stock + short call) and/or roll out the short call if it hits 50% max to reduce cost basis further.
Metrics:
Buying Power Effect/Cost Basis In Stock/Break Even: 43.00/share
Max Profit: 1.00
ROC at Max as a Function of Buying Power Effect: 2.33%
ROC at 50% Max: 1.16%
As previously noted in my other monied covered call posts, this only makes sense in a cash secured environment where you don't get BP relief going short put. On margin, short put will be the most BP efficient.
Trade active:
Rolled the May 17th 44 short call to the June 21st 44 for a .94 credit. 42.06 cost basis.