21st August 2023

NIO has been trading lower lately and has re-entered the $11.50 $10.95 area, the result of this is that I made 100% on Aug 18 ‘23 14.5 call as it expired completely worthless. No need to buy this one back!

Following this down trend with NIO it was slightly harder to get a good amount of premium on an optimal trade ensuring we would still come out positive.

We had already yielded $28 from our first covered call which reduced our cost-basis of our Jan 19’ 24 call down from $444 to $416. Unfortunately weeklies here around the $14 strike price simply did not make enough premium to cover the cost of my LEAP if assigned, so to play it safe I decided to go out a little further in duration and sell the Sep 01 ‘23 $14.50 Call, giving me a measly $15 in premium. (Pennies infront of a steam roller territory but you have to start somewhere!)

Looking at this from an annualized return perspective, my implied risk is $416 (my amount originally invested minus any premium received, essentially the true cost-basis of my LEAP), the duration of this trade is 15 days, so
(15 / 416) x (365 / 15 days) = 0.87, or 87% annualized return.

The recent downtrend in NIO stock can probably be attributed to the news coming out of China not recovering as fast as expected from the pandemic, but hopefully we will see a reversal soon.

A pmcc-calculator.com related updated:

Now that I am starting to increase my total premium received from the covered calls, in turn, reducing the cost-basis of my initial long call, it is now clear that there needs to be some sort of ability to either track or log these trades within pmcc-calculator. So this will be the next feature in the coming weeks 🙂, stay tuned.