I rolled back into a CPSL Call for the same month as before, June, this time for a strike price of 2.50. Capturing, what I thought was a premium, and taking the full value at 4.20. However, I failed to realize, that I had merely captured the intrinsic value of the stock. At that time, the 2.50 call was so deep in the money that it's delta was 1. It behaved just like the stock, and had little to no time and volatility premium.
What a deal I thought, what a deal. I thought I had found the secret to covered call writing. Just keep that up, and I'd be rich faster than anyone else on the planet. I was highly mistaken, but it took me a few more days to realize this.
I guess, words of advice to take away, make sure your strategy is at least plausible. Also virgin option traders--you really need to understand the basics backwards and forwards: Call/Put/Long/Short/ITM/ATM/OTM--please be smart, it's about protection.
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