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Motley Fool Pro / Pro: Catch-Up Trades


Subject:  Re: COO worked out not so great Date:  8/13/2018  4:27 PM
Author:  programinator Number:  819 of 830


So, have you closed out the position? When you got in, did you do the "buy-write" as a single transaction, or two separate transactions?

My understanding of the COO position is that PRO was looking for income, not growth, from COO. I think the thesis was that they felt that the company was/is strong, but not one that is likely to rocket. Now, things may not have worked out 100% as expected, but I have to say that, so far, it is doing just fine for me. My first short call expired worthless (but I was off-reservation in that I had a March expiration instead of May for my $240 short call). So in early April I realized that Pro still had its short call but I didn't have a short call, so I wrote one on April 6th, a $230 May 2018 call. I rolled that one out in May and again in June. Then in July I rolled it up and out from July $230 to Nov. $240. As of right now, I'm showing an XIRR of just over 14%. That's an annualized average return on investment for each dollar invested that takes into account each date and cash flow amount (positive or negative). So I think that's pretty good. Each time I've managed to receive a credit, and my break-even price per share has dropped from $230.55 to $216.04 over the course of the nearly 7 months I've been in the position.

I should mention that it did not appear to be doing all that well at various times, especially early on. But over time, and as I've rolled out, or up and out, for credit each time, it has gotten better. And the fact that the stock is trading above my strike price doesn't really bother me because that says that I'm "hedged out", and the stock would need to drop by about $13 per share to hurt my profitability on the position. I will also admit that I haven't followed Pro exactly as recommended, mainly because I had trouble achieving the prices they suggested that I should be able to get. It's been kind of hard to achieve the guidance, so when that happens I tend to go off on my own and follow the spirit of what they're recommending while not keeping exactly in lock step.

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