Hey so I was along for the ride with BKKT today (thanks Tedro and all!). Sold some but held on to two options that I bought for February 2022 at $20 strike price. Now those are in the money and I’m wondering wether I should just sell at open or sell a CC with them. Anyone with experience here have any thoughts on it?
You would be giving up a lot of extrinsic value if you exercised them. Do you think the IV will be high after the next week or so? I exercised 2 GME options back in January and sell covered calls on them more or less weekly, largely because the IV is very high. I’m not sure that BKKT will hold its value or have high IV going forward, but that’s really up to you to decide.
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Not looking to exercise, just thinking of using them like a PMCC
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Ah, sorry, I didn’t realize that was your intention. That could be interesting provided that you can still sell calls at a strike above your cost basis if the underlying decreases. It gets trickier if you can’t sell calls above your cost basis.
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Right, my cost basis is pretty low. Assuming it stays even around like 35/40 I’m ITM pretty deep at a $20 strike and it only cost me 2.50. I’ve only been trading about a year but mostly watching so I don’t have any personal experience with this stuff, but I think it stays above $40 and will have extremely high premiums at 50-60 range. Just trying to determine if a few sells of a CC are better or worse than just selling at open. I don’t know a ton of tickets and I don’t like using meme stocks but I’m imagining something like AMC which I’ve heard has been very good for selling CCs on
I like to sell CCs on stocks I intend to hold for year(s). When you sell a CC you are locked in and can’t flip your underlying (whether it’s shares or a PMCC) until the CCs expiration date, in most cases. You might also FOMO buy your CCs back at a loss if the underlying rises too fast. For a hype play you usually want to have the ability to pull the trigger at any time.
The underlying question is: will these levels hold or not, and the answer is none knows. There isn’t enough information on the company to make a solid fundamental case of what it should be valued at.
CCs are best suited for stocks that have established support/resistance levels and are relatively low in volatility.
If you have reason to believe the price will stay in this range and/or move up steadily then CCs are the better option, otherwise, scaling out to take profits is recommended.
Btw, selling at open is -the smartest but- not the only alternative to selling CCs, your calls have lots of time value left.
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