It is difficult for an ongoing business (or an investor) to go bankrupt without debt.
- Manlobbi
Halls of Shrewd'm / US Policy❤
No. of Recommendations: 4
Hi All,
Posting this here rather than the BRK board, since it is more topical. So back on 9-Aug-2023, I felt that GOOGL has been stagnating around and wasn't really going anywhere after the recent runnup, and decided to juice the returns a bit by selling some covered calls.
Specifically, I sold:
GOOGL 130 Nov-23 CALLS for $9.10/share (at the time, GOOGL was trading at 129.66, so the entire 9.10 was time value).
Fast forward to today, where GOOGL has increased to 138.13, and the current bid/ask for the option is at 12/12.15. I still think GOOGL isn't really growing like gang-busters right now, and wanted to roll the option up and out (the time value on my option has decreased to 3.95, but the intrinsic value is now 8.13).
What are the recommendations for rolling up and out (closing this set, openning another set). If I look at the Dec. CALLs, I can roll up to the 140. As far as I can tell, this would be buying back my CALLs at 12.1, for a net loss of (12.1-9.10 = 3/share) and then sell the Dec. 140's for 7.15, so my net would price where I break even goes to 144.15 (whereas it is currently 139.1).
So, what are the thoughts: should I wait longer, make the change now? Interested in working this out in public here.
Thanks, Gabriel
No. of Recommendations: 4
Well, it has been a few days (with no comment), so I thought I would update everyone to see what has changed.
1. The market for GOOGL has dropped rather significantly (currently at 127.82).
2. I wound up with the: "Don't just do something, stand there" approach and didn't do anything.
It is useful to see what would have become of the two different scenarios today, what I did, and what I proposed above.
The "do nothing" approach: still sold the calls at 9.10, and could buy them back today at 5.55, or roughly 40% of the potential profit.
The "roll up and out" approach: Buy back the Nov 130's, sold the Dec 140's, but them back today at 3.10, for a net gain of 11% of the potential profit of the original position.
Of course, I had no idea GOOGL was going to head south along with everything else in the intervening time!
--G
No. of Recommendations: 0
Of course, I had no idea GOOGL was going to head south along with everything else in the intervening time!
The market can will do almost anything in the short term; I wouldn't even try to predict short term movements.
tecmo
...
No. of Recommendations: 2
Really is amazing how Alphabet dropped 45% in price in less than a year from Nov.'21 to Oct.'22. As usual, I added too early in late Spring 2022 during the fall to fill my 'full' position & am just sitting tight. For fun, also holding some June '24 95 strike calls as well from last summer. Good post/link on the BRK Board today by longtimebrk providing a clear & brief GOOGL breakdown. Seem well positioned imo, come hell or high water, and wow, what a beautiful balance sheet & the $70B of approved buybacks!
