Repair or get put?

With XLE - the energy ETF - at $39.29 this option expiration Friday afternoon, 12/18/20, I was short today’s $40 put.  I’ve been using XLE exclusively for my IRA’s Sell Puts, Then Calls strategy since 12/23/19, when I sold the $59.71 put (dividend adjusted from $61.50).  I was assigned that $59.71 put the following month.  By 3/23/20, XLE was in the $20s.  I’ve been selling puts, then calls against XLE for a year.  I anticipate that Monday, 12/21/20 is XLE’s quarterly ex-dividend date; for about 50 cents.  A few months ago, I bought & still hold the XLE 1/21/22 $60 calls, as a hedge against a rapidly appreciating XLE market - my Sell Puts, Then Calls strategy limits me when XLE goes through-the-roof.

In considering repairs (rolls) for my in-the-money short puts & calls, I usually wait until option expiration Friday to bleed out the time value for my buy back (buy, to close).  Today, as part 1 of my repair, I could have bought back my December $40 put for $0.74 (only 3 cents of time value).  I would have then sold-to-open the 1/15/21 $40 put for $2.36 ($1.65 of time value), providing a net credit of $1.62.  For a 28 day commitment, a 52.8% annualized premium yield. Instead of the $40s, I could have sold the $39s for $1.79, which is my usual, barely-out-of-the-money modus operandi.  But I’m anxious to catch up to $59.71, & bullish, so I considered the already-in-the money $40s. 

My other consideration:  allowing my $40 put assignment today, forcing me to buy XLE at $40; and then selling the 1/15/21 $42 covered call, receiving a 60 cent premium.  For 28 days, a 19.9% annualized premium yield.  Since I’m hard up for appreciation, the chance for XLE to move from $39.29 to the $42 strike price, nearly 90% annualized, is attractive.  My long $60 calls would also be helped with strong XLE appreciation. And by getting assigned to buy today, I’m the owner today & would be eligible for the quarterly dividend that most likely goes ex-div on Monday.

I chose the $40 put assignment & I’ll sell a covered call next week; because I’m in the red, big time.  If I was in the black, I might have repaired.  I welcome hearing what you’d do.