OK guys, I'll admit I'm no genious when it comes to trading. I've done reasonably well investing in my 401(k) and IRA, but I'm trying to use my personal trading account to earn some low risk $. This is fun money for me, but I'd obviously love to build up a decent amount.
So far I've earned a decent return this year using leverage to sell covered calls (I realize this has probably been a good year for everyone on the long side). I know this method is for simpletons and not what many of you would do. However, I'm now on the losing end of a trade and want to figure out if I did something wrong (likely) or if it's just one of the inevitible times I'll lose on a trade.
Anyways, on 8/24 I bought a few hundred shares of NVDA at $14.34. I also sold Sep $14 calls for $0.78. I had been mostly selling out of the money calls, but I wasn't totally comfortable with that on NVDA (obviously a bad sign going into this).
Today, NVDA dropped to $13.18.
Do I sell the shares and just buy back my calls? Do I sell $13 strike options, which if excercised basically get me flat? But, if it gets back to $14 I'm screwed. Do I hold the shares and resell October Calls?
I have my thoughts, but I'm curious what the more experienced would do. Also, please let me know if I made any glaring errors here.
I know I'm opening myself up here to get killed by some sophomore in school, but I'm admitting I'm a trading idiot. I know quite a bit about finance, just not trading.
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