December Trades

Trade:

• Bought 200 shares BAC at $5.07 -- using $194.20 of margin
• Sold 2 contracts Covered Call BAC at Strike 5.00, at $0.36, expires January 20
• ROI 3.96% assigned, 5.89% not assigned
• Put in an order to Sell 6 contracts Covered Call ATPG at Strike 7.50, at $0.27
• ROI 8.00% assigned, 3.39% not assigned

Gut Check:
As predicted, I didn't get assigned on my ATPG Call. The nearest useful Covered Call I could write was for the Strike 7.50. But the price was still falling on market open. I thought about taking a very low premium, but decided against it. I was panicky about ATPG and thinking of dumping it.

I switched gears to thinking about what to buy. I had thought about REDF but that was looking bleak that morning. If I had gotten into it last Friday there would have been great ROIs to be had. But not this morning. Also, BAC is still technically a DJIA-listed Blue Chip. Plus, it's a bank and surely the US government won't let it go bust.

Looking to BAC, it wasn't volatile enough to give good returns but it had Weeklys. Price was dropping. I bought it hoping for a near rally, but it didn't happen and the price was dipping to $5 and looking like it might go even lower. I wanted to buy more shares but decided not to go into margin too much.
I put in an order to Sell a Strike 5.00 Covered Call at 0.22 for the December 23rd Weekly expiration (they were Bidding at around 0.15 at the time). Things looked so bleak and I was feeling scared. I looked ahead and saw that the monthly option still hadn't really budged for Strike 5.00 even though the Weekly was plumetting. I cancelled the order and went for a safe ~3% and sold a Strike 5.00 Covered Call for the January 20th expiration. I honestly thought BAC was going to really sink below $5.00 and keep going down. At just 2 contracts, a low premium would be eaten up by transaction fees and I wasn't willing to do less than 3% ROI per month.

I went back to ATPG. I could do the same and look far ahead to the February expiration options, but with a month ahead, I decided to see if I could wait this one out by putting in an order to sell a Covered Call. Could have done the same with BAC, but I was more worried about that. I still wanted my 3%+ ROI per month.

I had one helluva shock at this point -- the QuesTrade trading platform said I didn't have enough shares to do the Covered Call. WHAT?! Got onto Online Chat immediately and the final resolution was that it was a rare technical glitch that happens about 1% of the time. I think it has to do with lousy programming that doesn't recognize the previous Covered Call has already expired. Whatever. They tweak it on their end and I put in my order.

I hated the speculative stock-watching part of all this. I never wanted to be a speculator. I wanted to just do my trade and not look back, secure in knowing what the potential returns and losses would be.

Hoping my ATPG Covered Call order gets filled.