Thanks for the background info. The thought I had was that if I had purchased the Jan 2012 40 calls, assuming sometime when they were out-of-the-money, that having a substantial position in the call position, I might capture some of that profit by making some position to that position.
One strategy that I employ to capture profit in a short option position, be it a call or put, is to roll up or down the position in the direction of price movement of the stock that has resulted in reduced risk of assignment & unrealized profit. I've learned that when time is your friend, and price moves in a favorable direction, opportunities are present to adjust a position to generate more income by bring risk back to the level of the initial trade, or close to it.
I might have closed the entire long call position when the stock rallied to just shy of 60 in March, where it became quite apparent the stock had hit some prior resistance and needed to consolidate after a tremendous run from the low 30s in just 8 months.
As a writer of calls, I'm always looking for tops and I was able to write calls @ 60 and 65 and keep the income w/o reducing my position. But if I were long on calls, presumably since the stock traded below 40, I would have had an unbelievably itchy finger on the trigger.
When you play long maturities, and price moves in your direction, you have a lot of opportunity to capture some of that price movement by playing off the expiration dates you're willing to commit to.
Issue to consider at this juncture is how growth of Smartphones might begin to level off @ some point, & impact QCOM's chip business. These are fundamental questions that extend beyond the next quarter or two, and hence, make taking on some longer term option position more risky than "keeping it short." |
