Today I sold covered calls against half of my existing SOFI position.

Sold to open: 3 October 23 $15.50 Calls
Premium received: $0.50 per share
Gross option premium: $150.00
Shares covered: 300 of my 600 shares

I've owned SOFI for quite some time and have been selling covered calls against the position to generate income and reduce my effective economic cost.

However, the stock hasn't performed the way I had hoped, and I've decided it's time to begin working my way out of the position.

Rather than sell all 600 shares immediately, I decided to sell three October 23 $15.50 covered calls.

With SOFI trading around $15.37 when I was evaluating the trade, the strike was close to the market price. That allowed me to collect a relatively attractive premium while creating an opportunity for 300 shares to be called away.

My objective with this trade is different from some of my other covered-call positions.

I'm no longer trying to maintain the SOFI position indefinitely. I'm looking for a reasonable opportunity to reduce it.

SOFI is scheduled to report quarterly earnings on October 27, just four days after these options expire.

That timing was an important consideration in choosing the October 23 expiration.

Earnings announcements can produce significant stock-price movements in either direction. Since I've already decided to begin reducing my SOFI position, I didn't particularly want to extend these covered calls through the earnings announcement.

By choosing October 23, I have an opportunity for 300 shares to be called away before earnings.

If the shares aren't called away, I'll reassess the position before the announcement and decide how I want to manage the remaining exposure.

I'm not making a prediction about SOFI's earnings or how the stock will react.

I'm simply taking the upcoming event into account as I work toward exiting the position.

The three calls generated $150 in gross option premium, before transaction fees.

If SOFI is above $15.50 at expiration and the 300 covered shares are assigned, I'll receive:

That's $4,800 in combined proceeds, before fees and excluding premiums collected on earlier trades.

My stock basis is approximately $21 per share, so assignment at $15.50 would realize a loss on those shares. The option premium would partially offset that loss, but it wouldn't eliminate it.

I'm comfortable accepting that possibility because my objective has changed from continuing to manage the position indefinitely to gradually exiting it.

I still own 600 shares of SOFI.

300 shares: Covered by three October 23 $15.50 calls.

300 shares: Currently without outstanding covered calls.

If the covered shares are called away, my SOFI position will be reduced by half.

If they aren't, I'll reassess the position as expiration approaches, particularly with earnings scheduled for October 27.

The remaining 300 uncovered shares are also exposed to any stock-price movement surrounding the earnings announcement unless I take further action.

I'm comfortable managing the position from here, but I'm no longer committed to holding SOFI indefinitely.

One thing I've learned over the years is that there's a difference between being patient with a position and becoming attached to it.

I've been patient with SOFI. I've collected option premium and given the stock time to recover.

But at some point, it's worth asking whether the capital could be put to better use elsewhere.

That's where I am with SOFI today.

Sometimes managing a position means continuing to collect premium. Other times, it means deciding it's time to move on.

I was comfortable making this trade around the prices shown above. If the stock or option has moved materially by the time you receive this alert, I would not chase it. The economics may be different from the trade I made.

This is a record of my actual trade and actual fill, not a trade instruction or signal.Share the newsletter