I like the plan, however, I don't think you've given the stock enough credit. I wouldn't sell the 100's unless you think it will retrace first. That's the tough part of the call. You give two scenerios. A) first up strong, or B) sell of on news.
The options naturally either way erodes because the event is over and risk is removed.
B) give you downside protection, and you could rebuy, taking only a paper loss on your stock, some of which is mitigated by the call eroding. If downside protection is paramount, step up and buy puts.
However, I see why you're selling "in money calls" for the "BIG" protection all that premium generates, but the risk of being wrong means you lose your stock much quicker because you're already in themoney. With 105's or 110, that risk is reduced because the stock has to still go up more to meet the strike. You get less protection, but that's worth it - IMHO, because the stock historically has done well with earnings and now a split (projected).
A) UP first, your long stock appreciates, but the call will go against you, and you have to rebuy, probably much higher.
Personally, I would have sold the 110's (tried to...), or at minimum the 105's, not the 100's.
We shall see very soon!! |
