On Friday our short position in a Fastly (FSLY) put contract was very close to it’s strike price ($60) with almost two months until expiration (December 12, 2020) so I rolled it down (to $50) and out (to January 15, 2021). This is another loser for us. We closed the position for $600.69 but received only $194.30 to take it on. Over the 15 days we held the position we lost 6.8% on the capital at risk.
By establishing a lower position in an option with a lower strike price, I justified the maneuver because we would save $1,000 if shares are distributed to us.
I also closed a FSLY call option that was due to expire in two weeks. Again, with the market price around $60 and a strike for this call at $90, the market only required me to pay $25.69 to close the short position. Having sold the contract 7 days ago for $299.30, we netted $273.61.
Another short position in a covered call option, this time for Starbucks (SBUX), had three weeks to expiration but was available for repurchase at $17.69. SBUX is a much more stable stock so we sold the contract for only $64.30 and netted just $46.61 but holding the position for 29 days paid a dividend that would roughly buy dinner at Chipotle for my family.