I sold a 9.19 covered call on Net stock with USD 2 premium strike 220. Stock increased from 197 to 205 and premium is USD 4 now.
If I roll it 1 month and strike up to 230, I will still get credit from the call and I will be assigned at 230 strike, instead of 220.
If the stock rallies I will have to roll again until I will not be able to roll and my call will have a loss. For example I will be assigned at 240 usd instead of 220 usd.
I will have loss from call but 100 stock will have more profit.
For example I will have loss 1000 USD from the call sell, but my stock porfolio will increase 2000 USD in value.
So isnt it always better to roll if stock continue to rise. The only downside will be If I roll and stock starts to drop, I will lose opportunity cost.
Posted by East-Definition4057