Here's the situation:
I have 1100 shares of MDT.
I've been writing covered calls on this stock off and on for the past few years, say 4-6 times per year. I seek to get $1 per share, strike price $2-3 above current price, 1-2 months out. I usually wait for expiration and then start looking for the next good entry.
My last trade was on 8/18. I sold 11 contracts Sep55 calls for $1.
The next day Medtronic announced some good news and the share price jumped up over $55; even got close to $57 a few days later.
I've been mulling over some ideas and would appreciate any comments.
1) I could wait until expiration and see what happens. If my shares are not assigned I will just carry on as I have been.
2) If my shares are assigned I could buy them back on the next dip below $55. It's hard to imagine the price never dropping below $55 but there's no way to know how long that could take and my little income generator would be shut down until I get the stock back.
3) If my shares are assigned I could sell puts. Probably the $55 strike, when I can get $1 per share 1-2 months out. So the income generator could still keep running. If I ever end up getting the stock back I return to selling calls.
4) I could buy the calls now for about $1.10(thus closing the position) and sell Nov57.50 calls for $1.45
Any comments/thoughts would be greatly appreciated.
Mark
I have 1100 shares of MDT.
I've been writing covered calls on this stock off and on for the past few years, say 4-6 times per year. I seek to get $1 per share, strike price $2-3 above current price, 1-2 months out. I usually wait for expiration and then start looking for the next good entry.
My last trade was on 8/18. I sold 11 contracts Sep55 calls for $1.
The next day Medtronic announced some good news and the share price jumped up over $55; even got close to $57 a few days later.
I've been mulling over some ideas and would appreciate any comments.
1) I could wait until expiration and see what happens. If my shares are not assigned I will just carry on as I have been.
2) If my shares are assigned I could buy them back on the next dip below $55. It's hard to imagine the price never dropping below $55 but there's no way to know how long that could take and my little income generator would be shut down until I get the stock back.
3) If my shares are assigned I could sell puts. Probably the $55 strike, when I can get $1 per share 1-2 months out. So the income generator could still keep running. If I ever end up getting the stock back I return to selling calls.
4) I could buy the calls now for about $1.10(thus closing the position) and sell Nov57.50 calls for $1.45
Any comments/thoughts would be greatly appreciated.
Mark