My Medtronic CC Play

Discussion in 'Options' started by maw, Aug 28, 2008.

  1. maw


    Here's the situation:

    I have 1100 shares of MDT.

    I've been writing covered calls on this stock off and on for the past few years, say 4-6 times per year. I seek to get $1 per share, strike price $2-3 above current price, 1-2 months out. I usually wait for expiration and then start looking for the next good entry.

    My last trade was on 8/18. I sold 11 contracts Sep55 calls for $1.

    The next day Medtronic announced some good news and the share price jumped up over $55; even got close to $57 a few days later.

    I've been mulling over some ideas and would appreciate any comments.

    1) I could wait until expiration and see what happens. If my shares are not assigned I will just carry on as I have been.

    2) If my shares are assigned I could buy them back on the next dip below $55. It's hard to imagine the price never dropping below $55 but there's no way to know how long that could take and my little income generator would be shut down until I get the stock back.

    3) If my shares are assigned I could sell puts. Probably the $55 strike, when I can get $1 per share 1-2 months out. So the income generator could still keep running. If I ever end up getting the stock back I return to selling calls.

    4) I could buy the calls now for about $1.10(thus closing the position) and sell Nov57.50 calls for $1.45

    Any comments/thoughts would be greatly appreciated.

  2. magicz


    you can always lock in the profit and retain the share just sell the 60 or the 57.5 put and pray that the shares doesn't go down pass your profit range from now to exp but if it goes up higher you making more money.
  3. MDT is less than $54 and your sep 55 call is at 0.25 with 5 days till expiration. It's rolling time.

    Great trade.