So far my Covered Call Portfolio Hedge using Vanguard Real Estate ETF (VNQ) has worked out well – the original 2/17/2023 $91.00 strike price was challenged – I believe VNQ breached $94.00 a few weeks ago – but the calls were going to expire worthless on Friday, so I decided to roll the calls to April 2023 – skipping March because VNQ will be paying it’s quarterly dividend.
Here is the trade:
2/17/2023 – Rolled nine (9) Calls to 04/21/23 with a new strike price of $93.00. Premium Collected: $1,304.97
As I previously disclosed, I feel this is a soft hedge – given that I don’t think the market is dangerously overvalued. If the shares are called away at $93, the ETF is in my Roth IRA so there should not be any tax consequences. The trade basically forces me to sell / lighten my equity holdings if the market continues to rally into the Spring.
I would prefer to use some of the other ETF’s in my income portfolio for this purpose since they seem more overvalued – but the ETF’s I have (DIVO, JEPI, and JEPQ) don’t have much option liquidity.
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