Well since I purchased the buy/write strategy on June 2nd here I’ve watched as it’s dropped pretty from $5.90 a share, down to $4.40 a share… about 25%. So to say I was wrong about the direction is certainly an understatement.
However, thanks to the power of options, instead of being down $150.. I am only down 4%, or $24. WOW!
And as time goes on.. it’s eating away the premiums on the options I sold (not bought), so that $180 is now down to around $57.5. And dropping, which for me is a great thing… unfortunately for me, they announced a special dividend.. of $.84 a share, which would have been another $84 for me, however the date of record was 05/21.. so I missed it by 2 weeks (purchased my shares on June 2nd).
Anyhow, no big deal.. I may get a very good entry price on 200 shares as I posted in my original..
If on the other hand the shares go below $5 to say, $4 (over 47% drop) … then I will have to buy 100 more shares at $5.00.. which means that I’ll have paid $910 for 200 shares.. or $4.55 a share on average… which I don’t mind paying.. in fact I would likely do the same thing again and see if I can’t get more shares come July expiration.
So as of this writing, the shares are at $4.40 each.. with the market still looking sickly downward.. so I may get the 100 put to me and have to buy more in 2 weeks time.. but I’m going to just wait and see what happens.
Bottom line I guess is that this stock has gone down 25% since I purchased it.. an oddity for sure.. however since I’ve sold a few options. My risk is limited, and I’m still in a great position to make money on this stock. I can’t wait to do the same for DRYS which is a stock I’m going to keep as well.