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Alan answers a question posed by Tim, who asks:

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Alan,

I purchased 100 sh SNV @ 43.25 on 4/24/17.
I sold 1 contract @ .85/sh 44 Call.
I did my one week position management inspection of this equity on 4/30/2017.
I noticed the stock had a gap down of 41.80 that happened on the 27th. Stock is already below my breakeven of 42.40.Do I manage these trades on a daily basis?
To protect myself against this loss, can I set up a sell command and sell the stock at breakeven? If I auto sell command and sell the stock at break even, how do I handle the option since I no longer own the stock?
This was virtual trade.
Thanks, Tim”

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It’s the 2nd Wednesday of the month. Time for another original episode of Ask Alan. AA#136, “Closing a Covered Call Trade after Share Price Declines”

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