Today we had our DocuSign (DOCU) put option contract (strike: $175; expiration: 16APR2021) closed on the standing limit order we set Friday immediately after establishing the short position. We opened the position late during Friday’s trading session and it closed by noon today, Monday. In roughly one trading day we netted $123.61 on the $17,500 of collateral exposed to the trade. Though we only made 0.7% it’s not bad for a day’s worth of exposure.
We had a covered-call call away 100 Berkshire (BRK.B) shares on Friday. Unfortunately for us our strike price was $7.52 below the market-closing price on Friday so we’ll record this as a loss for our record. We were paid $124.3 for the option so our loss on the option was just $627 but it would have been nice to have been paid $260 per share. When we entered the contract, BRK.B traded down to about $248 from $252 earlier in the session; the $252 strike, 12MAR2021 expiration call-option contract was a position we rolled out and up from a $250-strike, 07MAR2021-expiration contract. Since we earned $68.61 from the first covered-call option contract, we earned an extra $192.91 from selling the two contracts, plus the $252.50 execution price was about $10 higher than the prevailing market price on the day which we first sold the call option.
We wanted to move this part of our BRK.B position to a tax-advantaged account because it would be taxed at the rate for long-term capital gains and our return for BRK.B was less than most of the other positions in our portfolio. The option contracts helped us earn an extra $1,250, and the market appears to be offering a more attractive price to repurchase the shares within the other account.
Source: Questrade.com 15MAR2021