r/options • u/thetacollector • 2d ago

Bagholding SPY..

Bagholding some SPY with a $563 cost basis.. can't really sell calls unless I go below my cost basis or extremely far out time wise..

Pretty sure that it's not gonna rebound to my cost basis any time soon..

Wondering if any of you are in similar spot and what your plan is?

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1

u/papakong88 2d ago

Your cost basis has no relevance in selling covered calls.

The only relevant factor is the rate of return.

4

u/thetacollector 2d ago

But if you sell calls where the (strike + premium = less then your cost basis) and you get assigned.. then your rate of return is a loss..

2

u/Bruce_Wayne_Wannabe 2d ago

Also, just roll the calls up and out, you can do that forever. Won't go up forever, and at some point, if it gets assigned, you should be very happy if you've kept rolling up and out for some time.

1

u/Aprice40 2d ago

I just rolled a call twice in March and each time it ate some of my profit. Doesn't that mean eventually rolling will result in a loss?

3

u/dip-the-buy 2d ago

That's because you rolled it wrong.

1

u/thetacollector 2d ago

Doesn't rolling coverd call upwards just also result in immediate loss also

2

u/dip-the-buy 2d ago

Ah, so you wanted to play options and never lose? You can't do that even with stocks, and with options, you must lose regularly.

0

u/papakong88 2d ago

The rate of return should be based on the stock price at the time of sale of the call.

-2

u/Christopher_Ramirez_ 2d ago

Realizing losses would be a good move for OP if holding in a taxable account. They can simply repurchase in 31 days to avoid wash sale rules, and in the meantime get deductible capital losses that can be carried over if not used up.