Thread by @wealthcoachmak

🔥 $SQ Covered Call Journey🔥

A thread 🧵 on two separate calls that I had sold against my 200 $SQ shares

Cost Basis: $69 per share

Initial calls sold on Jan 17 and 20:

1/27 $77C
1/20 $78C
Premiums: $123

👇👇👇

#OptionsTrading #Optionselling

On Jan 20 $SQ reached beyond my strike price of $78 expiring that day

So to protect my shares I rolled over the call

To 2/3 $80

Added premium: $111

By Jan 27 $SQ was almost at $84

I could let my 1/27 $77C expire and take the capital gain loss

But I wanted to capture the upside in the stock so I didn’t want to lose the shares

No idea how far up $SQ would go

So I rolled way up and over: 6/16 $97.5

Premium: $78

By 2/2 $SQ was almost at $90

My other call - 2/3 $80 - was also deep in the money

$SQ was ~ $10 above my strike price

So I moved this call to 6/16 $97.5 as well

Captured $75 in premium

So far my thinking had been to capture as much cap gain as I could without losing my shares

When you sell a Covered Call these are the risks you take

A stock running up sharply throws away all your premiums for a CC

I held steady going into 4th week of March

$SQ had come down from ~ $90 on Feb 2 to ~ $77 by March 20th

And then came the @HindenburgRes report

Stock tanked to below $60 and eventually leveling out in low $60s

I rolled DOWN the CC:

To 5/19 $85C for $106 premium (2 lots)

$SQ since then was trading mostly sideways

Peaked at $70 on March 31 but came down again to low $60s in April

I saw another opportunity to roll DOWN again

Time was moving forward and stock was mostly flat in these weeks

5/19 $82.5 x 2 lots for $48 premium on April 11

$SQ in 1 months has remained flat

Up $1.60 in the last 1 months

So on April 24 when $SQ is still around $63-64 I rolled DOWN the strike price further

To 5/19 $77.5 for $50 in premium

On 4/25:

Rolled down the $SQ call one more time

- From 5/19 $77.5
- To 5/5 $71
- 2 lots

Added Premium: $50

Reduced 2 weeks of time to free up this call sooner

I have less than 2 weeks to go to the expiry but if stock stays flat

I will continue to roll DOWN

I might roll it down to 4/28 to free up the call even sooner

$SQ

I strategically use the Roll Ups and Downs to capture the upside and take advantage of drawdown

I wouldn’t have been hurt if the very first time I hadn’t rolled over my call and let it expire

And then sell a CSP at the same price

But that’s hindsight

What if $SQ went to $120?

So with the knowledge I had at THAT time I rolled up so I could capture the upside in the stock

And then when the stock went down again I was still collecting premiums by moving the strike price down

Rather than allowing the calls to be still sitting at 6/16 $97.5C

Results:

Even with a big uptick and then the drawdown I kept making premiums

Counting the premiums for the original 2 calls in January total premiums made for all these transactions for these 2 lots:

$641 in ~ 3 months

$SQ