RE:RE:I don't know what to do! Help!Agree with herewegobigboii.
Sell 1 covered call (obligating you to hand over 100 shares/half your position) for $48 strike price expiring July 20 (last selling price price was $2.90/share). You immediately get a credit for $290.00, you now CANNOT sell 100 shares of WEED. You must keep them until July 20th. (I'm simplifying a bit here).
You're cost base is $28.80 on 200 shares and by bringing in $290, you've reduced your cost base to $27.35 (over the 200 shares).
So there are 3 scenarios possible:
1. The stock drops below $48 on July 20th and you keep the $2.90 premium x 100 shares = $290. If it closes at $47.75 on July 20th, you keep the shares and keep the $290.
2. The stock tanks to $36 on July 20th, you have kept the shares, but you brought in the premium of $290. The $2.90 premium that you kept lowers your effective acquisition cost for 200 shares from the $28.80. You might not be happy, but you still have the shares and are ahead of the game. investing is a long game not a get rich quick scenario.
3rd scenario is the stock booms to $54 (which is definetely possible) by July 20th, you are obligated to hand over your 100 shares for $48.00 + you keep the option premium of $2.90, which means you are selling the shares for the equivalent of $50.90. You can also buy the option back prior to expiry at near face value or roll them out to another month (August in this case).
I manage a large portoflio, selling covered calls (and cash secured puts) keeps you invested in the market and protects your portfolio from drops by bringing in option premium income.
I've hedged about 50% of my WEED portfoilio in this fashion. I've sold Calls from $40 all the way to $62 from July 2018 to Jan 2019.
Good luck.
Antham CFA
herewegobigboii wrote: selling half your position could be a good idea, and you'd roughly take your initial capital off the table. you could also look at selling covered calls, in your case, 1 covered call, slightly above where the current market price is. This can be an effective tool to sell at a set price, and take emotions out of investing. For example, sell a covered call at "x" $ strike price. If it's in the money at expiration, then you sell your 1 contract (100 shares) at that price!!
YoungInvestor91 wrote: Hi everyone,
These past few weeks have seen some incredible gains on this stock, and the consistent move upward had been amazing to be a part of and witness, as it's a first for me.
I would like to "take money off the table", but I'm also terrified of losing out on even bigger gains.
I only have 200 shares with an average cost of $28.80, so I'm trying to decice when (or if) I should exit before the end of this week.
I'm thinking if we hit $49 or $50 by tomorrow, I might sell half my position and hold the rest.
What do you guys think? Any advice on how I should proceed?
**Please no bashing of $20 next week, or pumping of $200 by December nonsense**