Investment Overlay Update – $GLW : Closing Options, Staying Naked

by CC January 9, 2014 2:58 pm • Commentary

In early November we added GLW to our investment portfolio. Here was the original entry:

TRADE: Bought GLW for $16.47

About a month later after 5% or so gains in the stock we decided to add some yield with an options overlay targeting the recent high to the upside and support just beneath our entry price. Here was that structure:

Trade: Overlay Against 100 shares of Long GLW ($17.08) Sell Jan 16 / 18  Strangle at $0.40

— Sell to Open 1 Jan 16 Put at $0.20

— Sell to Open 1 Jan 18 Call at $0.20

Since we put on the overlay, the stock has continued another 5% higher and our overlay is at strike to the upside. Decay has kept the structure in check and it can be taken off for a small profit now. With expiration next week we’re going to close the structure and look for something new in the next expiration or so as earnings while continuing to hold the long stock.

ACTION – Bought to close the GLW (18.00) Jan 16/18 strangle for .26 (sold at .40) for a .14 profit

– Leaves the original stock purchased at $16.47