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META ETF: Investing, Trading Options | (Update: New Ticker METV as of 1/31/2022)

Updated: Apr 22, 2022


On December 28, 2021 I decided to start building a position in an ETF META (not to be confused with the company, Meta, formerly known as Facebook). META is an ETF based on The Ball Metaverse Index.

With the share price at $15.48, I bought 150 shares. I sold a put with a strike price of $15, expiring February 18, 2022 and a covered call with a strike of $16, expiring the same date. I brought in $103.66 cash for the two options. The next day, the share price had dropped a bit, so I sold another put with a $15 strike, expiring January 21, for $30.33.

My History of Trading META

This is my first trade with META. My current adjusted cost basis/breakeven on the shares I own is $14.59/share, which will increase a bit if I am assigned on either of the $15 puts. (I am hoping for this outcome.)

Goals and Thoughts for Trading Options on META ETF and Buying Shares

The holdings in this ETF include several companies that I like a lot, including NVDA, FB, MSFT and RBLX. Many of those stocks have a share price that is too high for me to comfortably trade options with them, and the META share price of less than $20 means I can build a long position and trade both calls and puts around it to generate extra income and lower my breakeven.

I expect this to be a growth position, so I have to be careful not to sell too many calls at one time. The share price will likely get ahead of them and cut into my capital gains, so I will build the position and only will sell one call at a time, with a strike that adds to my profits if I have to take assignment.

My general practice with short calls is to roll them straight out for > 15% annualized returns, or increase the strike if 1)I can generate > 10% annualized returns and 2)I think it will help me be able to hold on to the shares.

If the $16 call goes in the money, I'll either try to roll it or accept assignment and sell puts to try to buy back the shares for a $16 breakeven.

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