Zero To Hero Challenge Ep8: Whipsaw Action

How do you eat an elephant? One bite at a time! As expected there was going to be a sell off on $BBIG opening this morning.

Investors were quick to take profits on the highly volatile penny stock as we began the day green. It quickly returned back to prices it was trading at last week, in the low 90c level.

My 500 shares are worth around $460 plus I have $67.53 in cash buying power (no margin). The covered calls I wrote are worth about -$70 at the moment and should decay rapidly over the coming weeks towards zero.

The goal is to consistently generate cash flow using the shares and contract premiums. With this kind of volatility it will be very profitable! Just today the high for these $1 calls was $25 per contract.

They are losing roughly 35 cents per day in value with a Theta of 0.0035 and since I sold 5 contracts that means I will be making about $1.75 per day on time decay.

The implied volatility is over 176% which is great for me since I am writing covered calls. The options buyers are paying excessive premiums to place these bets and some of them are making nice profits. Remember that most options expire completely worthless and the premiums go to the writers.

Regardless of what happens I just want the stock to remain hovering near this $1 level so I can reap the benefits. If it closes above $1 then I have to sell at $1 per share, my breakeven is $1.12 currently ($12 per contract plus $1 a share guaranteed).

Profits from these posts go towards buying BEE tokens, which will be used for the ICEBRK.IO front end expansion, a platform for web3 projects.