I sold 3 contracts of Nvidia 1/17/2025 covered calls about a month ago with a strike of $162. Those are up about 95%. What are your thoughts on closing those out?
Well I can’t give advice on what anyone should do with their portfolios as this is a publication. I can only tell you what we would do and we wouldn’t hold covered calls that are 95% green.
I can just tell you “generally speaking” we prefer to take profits when we’re up that much on covered calls and then use rebounds as an opportunity to sell more calls later on.
That’s not to say there aren’t situations where you just let the covered calls expire worthless.
Our strategy right now is to cover/close our calls to avoid the upcoming rebound. And as long as the QQQ remains in “correction risk” territory, we’ll sell covered calls and premium against other option positions. But once the QQQ sustains a full correction such that the risk and bias is to the upside, we’re done selling covered calls. We won’t do so again until the end of the next intermediate-term rally. That’s because one the market gets going, the risk is high that it pushes right through one level and the next.
From the last bottom, for example, the QQQ ran from $447 up to $539. Anyone selling any covered call would have been blasted.
By
/ January 2, 2025 
Hi Sam.
I sold 3 contracts of Nvidia 1/17/2025 covered calls about a month ago with a strike of $162. Those are up about 95%. What are your thoughts on closing those out?
Well I can’t give advice on what anyone should do with their portfolios as this is a publication. I can only tell you what we would do and we wouldn’t hold covered calls that are 95% green.
I can just tell you “generally speaking” we prefer to take profits when we’re up that much on covered calls and then use rebounds as an opportunity to sell more calls later on.
That’s not to say there aren’t situations where you just let the covered calls expire worthless.
Our strategy right now is to cover/close our calls to avoid the upcoming rebound. And as long as the QQQ remains in “correction risk” territory, we’ll sell covered calls and premium against other option positions. But once the QQQ sustains a full correction such that the risk and bias is to the upside, we’re done selling covered calls. We won’t do so again until the end of the next intermediate-term rally. That’s because one the market gets going, the risk is high that it pushes right through one level and the next.
From the last bottom, for example, the QQQ ran from $447 up to $539. Anyone selling any covered call would have been blasted.
Thank you Sam!