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No. of Recommendations: 3
Zy,

My advice is to hang in there. Keep on rolling your short call, and if possible, roll for credit each time. If you can keep on reducing your basis in the position with each roll, then I think you'll eventually see some decent gains on it. I doubt it's ever going to be one of your most lucrative positions, but it should provide some steady income. I would also advise you to track each position via a spreadsheet so you can see all of the cash flows associated with that position, including dividends and any options trades that pertain to it. If you set it up correctly using Excel, for example, you can use the XIRR function that is built into Excel to calculate the internal rate of return for the position, taking into account all cash flows in and out. It took me a while to figure out how to make that work, but it was worth doing, I think. That helps me to evaluate how each position is doing. Of course, I don't look at this every day, and sometimes not even every week.

I think Pro likes to do these types of positions that bring in cash flow on a regular basis as a way of balancing out the portfolio. We don't want every position to be high-growth like SQ, FB, or BR. Some positions may be high growth, but it's good to have some that merely provide a source of steady income. But in many cases high growth also comes with high volatility, and sometimes more risk (those two aren't synonymous). So we want some that are much more steady, which helps to explain why JNJ is in the portfolio.

The HD diagonal also comes to mind, although that one employs a bit of leverage since we have a long call instead of shares in the case of HD. COO didn't make much sense as a diagonal because it doesn't have LEAPS, or they might have considered that. Right now the longest-dated options expire in Feb. 2019. We also had VRSN until just a couple months ago or so, which also did great. I actually implemented that one as a diagonal along with a short put spread, and that worked out really well for me.

Dan
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