Trading earnings is often described as a coin flip, but today I executed a specific strategy to remove the “gamble” from my ROKU position. Heading into the Q4 report, I held a Poor Man’s Covered Call (PMCC) consisting of January 2027 $60 LEAPS (initial cost basis: $42.85) and a short March 6th $110 call.

With ROKU tanking to a session low of $78.53 earlier today, I saw an opportunity to secure a “Double Win” before the closing bell. Here is the breakdown of the move I made and my plan for tomorrow’s market open.

The Move: Harvesting the Short Call

The short leg of this trade—the March 6th $110 call—was initially sold on February 5th for a $3.40 credit. As ROKU fell toward the $78 level today, that premium became a ripe target for harvesting.

While ROKU was under extreme pressure, I chose to Buy to Close that call for $2.73.

By closing this leg for a profit at the bottom of the pre-earnings dip, I achieved two critical objectives:

1. Locked in “Real” Money: I banked a $0.67 profit per share ($134 total for 2 contracts) while the stock was at its weakest.
2. Cumulative Gains: This marks the second short call I’ve successfully closed since opening the position on Feb 3rd. Total income from “rent” collection now stands at $365, effectively lowering my net cost basis on the LEAPS to $41.02.
3. Uncapped the Upside: By removing the $110 “ceiling,” I transitioned my position from a capped spread to a pure long LEAPS play just minutes before the news broke.

The Result: After-hours, ROKU exploded on an earnings beat, hitting a post-market high of $94.95. Because I closed the short call while the stock was struggling near $78, I now own 100% of this $16.42 upward move without any capped resistance.

The Plan for Tomorrow: February 13th

With a net adjusted cost basis of ~$41.00, the “Time Value” of the 2027 LEAPS means the position is in a very strong position. Here is my protocol for tomorrow’s session.

1. The 10:00 AM Rule

I will not touch the position at the 9:30 AM opening bell. I will wait for the first 30 minutes of “amateur hour” to pass. At 10:00 AM ET, I will evaluate if the $95 level holds as new support.

2. Managing the Long Call

• The Reality Check: Even though ROKU is below the theoretical $102.85 expiration breakeven, the options will likely trade for $50.00+ tomorrow due to the two years of remaining time and the IV expansion.
• The “Scale-Out” Strategy: If the LEAPS hit $50.00–$52.00, I will sell one of my two contracts.
  • Why? Selling one at $50.00 combined with the $365 already collected means I have recouped $5,365 of my initial $8,570 investment (~62%).
  • The Benefit: It drastically lowers the risk on the remaining contract, allowing me to hold it for a long-term run toward the analyst targets of $120+ without stress.

3. Re-selling the “Rent”

I will not sell another short call immediately. If ROKU fades tomorrow (as it historically has), I want to wait for the stock to stabilize. I will look to sell the April $120 strike once the post-earnings IV crush has settled.

Summary

By harvesting the short call at $78.53 today and adding to the $365 already banked, I have successfully “chipped away” at the cost of this trade. My focus tomorrow is on de-risking. By selling one contract near $50, I turn a high-stakes earnings play into a “low-stress” long-term investment.