When does it make sense to close and roll forward a CC?

A

a529612

Long CVX @ 74
Short CVX Mar 75 Call @ 1.1

Now the short call worths only 0.05 bid, 0.1 ask. Is it prudent to close the existing CC and roll it forward to Apr 75 so I get more protection to the downside? Or should I wait till it expires worthless at expiration? My sentiment for the stock is flat to moderately bearish near term.

Thanks!
 
Quote from a529612:

Long CVX @ 74
Short CVX Mar 75 Call @ 1.1

Now the short call worths only 0.05 bid, 0.1 ask. Is it prudent to close the existing CC and roll it forward to Apr 75 so I get more protection to the downside? Or should I wait till it expires worthless at expiration? My sentiment for the stock is flat to moderately bearish near term.

Thanks!
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Well, if the stock falls before you roll you will get less credit for your roll. Vice versa if the stock rises before you roll.

I don't think there are any magic answers here. Although your "flat to bearish" outlook says that you don't expect it to rise so you should probably roll now.

However because covered calls are a "flat to bullish" play, with your outlook, a strike closer to the money or ITM may make more sense.

Don
 
Quote from a529612:

Long CVX @ 74
Short CVX Mar 75 Call @ 1.1

Now the short call worths only 0.05 bid, 0.1 ask. Is it prudent to close the existing CC and roll it forward to Apr 75 so I get more protection to the downside? Or should I wait till it expires worthless at expiration? My sentiment for the stock is flat to moderately bearish near term.
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Buying march and selling april is in fact a short calendar. Lookup under what conditions a SC is best done.

Ursa..
 
Quote from MajorUrsa:

Buying march and selling april is in fact a short calendar. Lookup under what conditions a SC is best done.

Ursa..
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But I'm buying to close March and selling April...
 
Quote from a529612:

But I'm buying to close March and selling April...
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That shouldn't make a difference. That is, you're still putting on a reverse calendar even if one leg is to close.
 
Don: "If the stock falls before you roll you will get less credit for your roll. Vice versa if the stock rises before you roll."

MajorUrsa: "Buying march and selling april is in fact a short calendar."

Taking this one step further... Monitor the calendar's spread. If it's widening (getting larger), time decay is doing its magic (and price isn't moving away from the strike). If it narrows, see why and act accordingly.

FWIW, if you're looking for more downside protection, rolling forward to the Apr 75c for a 25 ct credit doesn't provide much. Consider a later month.

Spin
 
Short-options that have diminished to teenies should ALWAYS be offset because the risk/reward is unattractive to the short-seller. Don't hang around for that last penny, nickel or dime.
 
If you're outlook is flat to bearish, why would you want your position to be synthetic short itm puts (assuming you're selling 1 call for each 100 shares of stock)? That's a bullish position. As for rolling the call, do so whenever you feel the synthetic march short put is so cheap you wouldn't sell it if you didn't have a position to begin with.
st
 
my .002 cents...definitely close. Then sell the stock and write(sell) the April 70 put...or keep the stock and write(sell) the April 70 straddle (70 put=3.90 , 70 call =1.10)
 
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