For the guidance of subscribers who reported getting aboard near last week’s trampoline low at 33.77 — a penny off a Hidden Pivot target I’d flagged — I am tracking 100 shares with a profit-adjusted cost basis of 30.36. In practice, you should still be holding 25% of whatever position you acquired initially. I’d suggested covered-writing the shares 1:1 on a rally to $38.00, but it now looks like GDXJ could go as high as 38.82 on this run-up(see inset), so there’s no rush to short the calls. If the stock reaches the target, it would amount to a 15% rally from the recent low. ______ UPDATE (May 2, 2:37 a.m. ET): You can covered-write your remaining shares 1:1 at will today, using May 9 34.5 calls. Please report fills in the chat room so that I can establish a cost basis. Officially, I will use a price midway between the best and worst reported prior to 11:00 a.m. _______ UPDATE (May 5, 11:00 a.m.): I’ll tentatively use 2.80 as the price for the covered calls unless fills are reported at a lower price. For now, do nothing further. ______ UPDATE (May 7): Our covered write was well timed, since the stock has fallen 6% since topping on Monday’s opening at 37.48. We’re completely protected down 34.20, so don’t sweat it. ________ UPDATE (May 9, 12:06 p.m.): Time to roll the covered write. Sell the May 9/May 17 34.50 weekly call spread for at least 0.65, one spread per hundred shares held. (You should shoot for as much as 0.85 if the stock drops today toward the 34.50 strike.) The net result will be to leave us short May 17 calls 1:1 against shares we continue to hold. I am suggesting this because it looks like there may be yet another sell-off coming. I would work this order by first trying to buy (i.e., cover) the May 9 calls we are short on-the-cheap. _______ UPDATE (Sunday evening): I’ll assume the spread was rolled for a credit of 1.00, giving us an effective cost basis of 27.76 for the round lot of stock that remains (or 25% of the original position). For Monday, bid 0.60 to cover the call(s) we just shorted, contingent on the stock trading 34.40 or higher. The goal is to take a profit on a swoon, further reducing our cost basis. We would then try to covered write a deeper-in-the-money option for more downside protection. The stock could conceivably fall to as low as 32.12 if the midpoint support at 34.82 gives way (see new chart). _______ UPDATE (May 13): Skip it for now. We’ll stay short the May 34.50 call(s) for 1.00, covering them on the closing bell on Friday if they are in the money. _______ UPDATE (May 16, 9:42 a.m. EDT): I suggest covering the expiring 34.50 calls we shorted as a covered write. Current market is an outlandish 0.30/0.60, but you can bid them 0.10 over the intrinsic value for the next couple of hours. With the stock now 34.85, that means you could show a 0.40 bid.
