PoetTrader,
In reading your post it sounds to me like your objective is to not be called out on the NVDA shares you hold, but rather to buy some new shares at a higher basis to deliver when you get assigned resulting in a realized loss. I'm not a tax expert, but I don't think you can make this work. Even if you could get the broker to identify the shares recently purchased as the shares delivered to meet assignment, the calls are too far ITM to be "qualified". It is my understanding the IRS generally frowns on the selling of ITM calls as a means of in effect taking your money out of an investment without realizing a gain on the underlying shares. I really don't know how they would deal with this. I expect others here know a lot more about it, but you might find something useful here
cboe.com
I think you would have the same issues with the puts, even if you got your broker to agree that the stock put to you would be identified as the stock delivered to meet assignment on the calls.
I don't really understand what you gain by any of this. If your cost basis is 30.00 and you are called out at 30.00, you have no gains to worry about
As far as repair is concerned, NVDA has already run way past the point of effective repair. You could buy the calls back, but at this point it would be as if you had stood aside with no NVDA position, watched NVDA climb all the way up here and then decided it was time to buy. Is this where you want to enter NVDA? If it is, buy back your calls and look for a good strike and month to write, or just let it ride. If not, you might as well let it get called and hope for a better entry down the road.
I am definitely not the person to tell you where the market is going from here. I'm astonished at how far some of these stocks have come off the lows in such a short time in the face of economic weakness and poor earnings. We may all be astonished how low it goes the next time it turns down. What I do know is that if you do nothing here it is very unlikely you will lose on this trade. If you act now to allow yourself a little upside potential, you will also expose yourself to downside risk which could be substantial. Only you can decide if you are willing to accept that risk. For myself, I'll just put NVDA on a long list of shoulda coulda wouldas that got away.
Dan |
