<<Long and writing calls when I can.>>
Yes, me too. There is whining on the thread again, so maybe an explanative post will help.
Today I bought 1000 shares of MRVC for my wife's IRA at $23.50, via a GTC order. I immediately set up a GTC to sell 10 April 25 calls @ $2.00 which would require MRVC to pop to $25.5 or so soon.
Let's examine the possibilities (excluding commissions):
I) The GTC never hits. In this case I got a good price for the short, intermediate and long term, with excellent earnings coming out (after April options expire) in a month.
II) The GTC hits and I receive $2,000. In this case I have 3 possibilities.
A) MRVC closes above $25 on April 17th and the calls are exercised.
In this case I end up with a $3,500 profit (14.9%) in 1 month
- I'll take it, and try to buy MRVC back on a dip!
B) MRVC closes under $25 on April 17th. In this case I end up with a $2,000 gain and keep the stock. This is an 8.5% gain
- I'll take it!
C) I put in a GTC to buy back the calls at $1.00 and leave it outstanding for a few days. If it doesn't hit, I can cancel and set a buyback for 1/8 near expiration. If this hits, I can:
1) Replace the GTC with another buy at $2.00 and try to repeat the cycle within the same month.
2) Keep the $1,000 gain (4.25%), freeing up my shares to possibly sell or whatever.
Next month after earnings, hopfully MRVC is trading $5-$6 higher and I will repeat the process with the May $30s.
MRVC is great for this!
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