When the big drop that happened in the markets, I decided to exit my position. So on Aug 24, I placed a limit order $0.03 higher than the bid price to sell my 3 contracts. This trade took place inside my TFSA.
Summary:
Initial Investment including commissions = 3*100*1.15+$12.95
= $357.95
Proceeds of Sale = 3*100*$.38-$12.95
= $101.05
Return on Investment = ($101.05-$357.95)/$357.95
= -71.77%
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In full disclosure, I still own 100 shares of TD in my margin account which I owned for months now.
Disclosure: Long TD
DISCLAIMER:
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.
Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.
That sucks IP, any reason why you wouldn't have considered selling 1 contract against the 100 shares you hold in the margin account instead? You keep the premium that way (I think of it as an extra dividend).
ReplyDeleteDaniel Austin,
DeleteI do consider from time to time selling covered calls in TD and RY. As my entry point is high, the premium collected will reduce the cost basis. Unfortunately, I do not have the limit orders on for this all the time so I sometimes miss out on a market rally.
I actually had limit order in for a covered call in TD a little while ago for October 2015 expiration but not got filled as the market fell.