Alan answers a question coming from Andrew of Marblehead, MA. Andrew writes… "I was watching JP Morgan when it was trading at $33.75, and the August $34.00 call was at $0.93. After taking a phone call, the stock price was up $0.65 to $34.40, but the call option increased only $.35 to $1.28. Does this have anything to do with the option going from out-of-the-money to in-the-money? Please explain.”"
“Want more? We thought so, join now and take full advantage of our HUGE resource library of over one hundred “Ask Alan” videos with more added EVERY month! Get direct accesses to Alan and have your questions answered. The complete library of Ask Alan videos is located in our premium member site.
First Month Trial: $14.95
Each Month Thereafter: $39.95
12 Months + 1 FREE: $454.40
Each 13 Months Thereafter: $479.40
If you want more “Ask Alan” videos, you can view the archive.
Additionally, to get our freshest content (like “Ask Alan”), be sure to like us on facebook:
- For those new to Alan’s system of Covered Call Writing, be sure to take the
Free Beginners Corner Series
- Free Training Videos Archive
- Ask Alan Video Q & A Archive
- Subscribe to our YouTube Channel
To enter your questions to “Ask Alan”, fill out the form on the contact page. Be sure to begin your message with “ASK ALAN”.
I am a fan of your tutorials. Thank you for your good work!
I have a question:
Recently I bought a debit Call spread of TSLA, Expiration 32 days for a net debit of $575.
When TSLA started to tank a few days ago, I rolled over (bought back and sold the next (nearest) Expiration my short Call for a debit of $250 and a realized gain of $630.
Then the same day I rolled over my position back to my old Expiration and received a net credit of $230 plus realized gain of $700 TSLA.
So now my net investment is: 575+250=$825,
and I have a realized gain of $630+700+230=$1560.
But now the cost basis of both these legs (Long and Short Calls) is showing an unrealized loss.
My question to you is: If my trade (both these legs of my debit Call spread) ends worthless on Expiration day what happens to this unrealized (paper) loss?
And what is my actual P&L that I should reflect in my ledger if my trade ends as I wrote above (worthless but in paper loss)? The money earned-money invested?