Rolled GDXJ calls.

music selection:  “All We Are” — Warlock

After lunch yesterday, I took some time to review positions that were scheduled to expire over the weekend.  I noted that GDXJ was well into the money.  I could let shares be called away, earn my full premium, plus a dollar in capital gains as the strike was one dollar higher than my  assignment price.  Instead, I opted for more income and to try to capture a second dollar of capital gains.

I bought to close the 47 strike call and simultaneously (using a combo order) sold to open the 48 strike 21AUG2020 call.  I took a net credit of 75 cents.  With the trade being in force 40 days, that annualized out to 14.88% against my cost basis of 46.  Should shares be called (which is likely as I am still deep in the money) and additional dollar in capital gains will be captured.  That is good for 34.71% annualized.  You could argue that the capital gains belong with this expiry and not the prior so the second dollar also should be considered in the annualized gain.  With two dollars in gains the annualized return jumps to 54.55%.

GDXJ is sort of running away from me as the price of gold and silver rally.  I will attempt to roll up and out again as expiry nears but at some point, I will be so far in the money it will be difficult to roll for a meaningful net credit and I will lean towards having shares called away.

Devour your prey raptors!

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Roll GDXJ up and out

Never miss another opportunity to devour prey!

2 thoughts on “Roll GDXJ up and out

  • July 14, 2020 at 7:20 pm
    Permalink

    I wonder if it is a good time for long calls on gold. GLD’s volatility has never been high enough to tempt me to write a put, so maybe I should buy the call.

    Reply
    • July 15, 2020 at 1:38 pm
      Permalink

      Gold is on a tear but Silver is in an even stronger uptrend. This makes sense as the long term gold to silver ratio of about 20:1 briefly stretched to 100:1. Just reversion to mean suggests Silver outperformance. I’m looking at a pairs trade of long silver, short gold.

      Reply

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