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

Updated: Apr 22, 2022

META


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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6 Comments


Ian Botley
Ian Botley
Jan 31, 2022

META changed to METV today - didn't see that coming.

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I saw something about it the other day. I think Facebook forced it.

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Update: On January 21, I bought another 40 shares at just over $13/share. My $15 put was assigned, so I spent another $1500 on 100 shares.


I now own 290 shares, with an adjusted cost basis of $14.35/share (taking into account everything I've spent and all the options premiums I have gained). With the NASDAQ selling off this week and last, the stock is trading at $12.47/share. It is worth quite a bit less than I have paid for it. But since this is a long-term investment for me, I don't mind averaging down my costs as I add to the position.


I still have a short call with a strike of $16 expiring February 18, so if the share…

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Update- With the big tech sell-off this week, the share price of META dropped into the low $14 range, once even dipping below $14.


On January 6, with the share price at $14.13, I wrote (sold) another put with a strike price of $14, expiring February 18, bringing in another $48.33. I now have earned $182.32 in premium for 3 puts with strikes of $14, $15 and $15, expiring in January and February. My plan is to accept assignment on one of them and to keep rolling one or two to further bring down my adjusted cost basis.


Note: Adjusted cost basis is my actual cash invested, and may look different from the cost basis shown on my brokerage platform.

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Hi Ian, yes, I'll update as I manage or expand the position. Thanks for joining the conversation!

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Ian Botley
Ian Botley
Jan 10, 2022

Hi Patricia,

I like the look of this trade and I decided to join you on this one today (Jan 10). As META has traded lower since this blog post I got my 150 shares at 13.85 and have a two $14 Feb 18 puts and one $15 Feb 18 call.


Do you plan to publish updates to this trade as you build your position?


Congratulations and best wishes on your new endeavor and I will see you on LIC!


IanJB

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