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Based on last Friday’s closing numbers, our fearless member expected to receive $15,360.00 in premiums for selling covered calls on her 2,400 Novavax (NVAX) shares yesterday (Monday, December 14) and decrease her losses to $71,724.45.
She actually received $19,080, bringing her losses to $68,004.45. The premium was $7.95 per share – the highest that it has been in a long time.
You might remember that in mid-August, she lost $232,407.50 in a $500,000 portfolio by buying Novavax (NVAX) at $174.00, the stock’s price peak.
By selling just out-of-the-money covered calls on NVAX every Monday after that, with expiry date on Friday of the same week, she brought her losses from $232,407.50 down to $26,341.25 by November 13!!
Her share were called away a few times. Because the premiums remained high, she bought NVAX back at a price higher than the strike price at which the shares were called away from her. Her philosophy, correctly, is that when the returns are high, we do want to have more money invested.
Again, Novavax price dropped and again, she lost money being whipsawed by the market. On Monday, November 16, NVAX shares dropped further, bringing her losses back up to $103,984.05. Going in the wrong direction even though it is an improvement on the original loss of $232,407.50.
She plans to continue selling just out-of-the-money covered calls on NVAX every Monday with expiry date on Friday of the same week.
Will she ever wipe out her losses and begin making money on this adventure?
We will keep you posted.
Please note that the Monday Morning program encourages index investing by buying an exchange-traded fund that tracks the S&P 500. Historically, over the long term, this passive investing strategy has been the best way for growing savings and is are likely to remain so for many years.
What you see above is NOT passive investing, however, many of our members are interested so we write about that once in a while.
We have designed the Monday Morning Millionaire Program to offer abstracted investment education. Over the last two decades, the program has outperformed over 90% of portfolios, including professionally managed ones.
The program does not provide any investment advice or endorsements.
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