Roling covered calls

I bought MSTR a few weeks ago at 150 and I wrote a weekly covered call against it with a striking price of 152.5.

The stock keeps going up and I keep rolling up the call, keeping the same striking price of 152.5 collecting premium every week.

It seems to me that I can keep collecting premium and be in good shape as long as the stock value does not go substantially below 150.

If the call is exercised, I profit for the remaining time value.

What am I missing?

 

"Rolling an option" is a fancy way of naming two actions: closing the option and opening another one instantly.

That's it.

 

I get that, In the above example can I keep rolling indefinitely profitably? Thank you

 

Just calculate the pnl at the time you are closing the option minus commissions for the action. That is what you'll get.

 

eventually you will be called away or the stock will drop hard.

in the former case you will have to reconcile whether selling the calls was better than just holding and in the latter whether the whole endeavor was worth it. It will depend on the timing and ferocity of the move.

 

If/when I get called, the other party will lose the remaining time value. Is that correct?
If so, I can roll over for longer period of time so that the time value is much higher. Am I missing anything?
The stock dropping hard is an acceptable risk since the exercised price is far below.
It cannot be so easy, what is missing??

 

when you get called there will be no time value left.

You are missing the concept of marked to market in all scenarios. You’ve already made 15 dollars a share. Would you buy the stock here and put the trade on?

 

"when you get called there will be no time value left."
I can always roll over while there is enough time value left.

"Would you buy the stock here and put the trade on?"
The idea is to keep the stock and try to avoid called away by making sure that there is always high time value, while I collect premium

 

that wasn’t your first question. You can always roll before you get assigned.

each time you roll, you make a conscious decision to not sell (when you easily could and lock in your current profit). What you are missing is you are adding this past marked to market pnl in with your current opportunity.

 

Thank you and I appreciate your patience with my questions.

Can you please elaborate on
" What you are missing is you are adding this past marked to market pnl in with your current opportunity."

What is the worst-case scenario with my approach?