Bought 1000 Shares of OXY to Cover My Naked Call

This morning I had a 10 contract $14.50 Covered Call with Occidental Petroleum (OXY). And I had a 10 contract $14 Naked Call.

I sold the $14 Naked Call when the stock was at $14.38. I had a strong feeling OXY was gonna come down. This is the importance of following a few stocks and not many. You get to know how the stock moves. Nothing is written in stone, anything can happen, but when watching fewer you can take a more educated guess on where a stock is going. My prediction with OXY came true and the stock dropped below my Strike Price of $14. Since I sold the Call with the stock In-the-Money I got a much better premium.

Tuesday, with the stock at $14.38 I sold 10 5/29/20 $14 Calls. I received a premium of 65¢ for $650. A few minutes ago I bought 1000 shares of OXY to cover this Call. I paid $13.90. Getting the 65¢, and now making an investment of $13.90 per shares, gives me a Rate of Return of 4.6%. This position expires tomorrow. Below is the Call I sold and the stock I bought.

5/26/20 – ($14.38) Sell to Open 10 OXY 5/29/20 $14.00 C @ .65 (+$650)

Today – Buy 1000 Shares OXY @ $13.90

This position now has a Risk Factor 1.

If OXY stays above $14 and I get assigned I’ll make another $100 on the stock sale. If not, I’ll sell another Call for next week.

I was also just filled on a 2 contract Call with Nvidia (NVDA). I own 200 shares at $361. The stock came down in the last few days. Today with the stock at $347 I sold 2 $360 Calls. I received a premium of $1.20 for $240. I don’t think NVDA will hit $360 by tomorrow but if it does I’ll get assigned and lose $1 on the stock. I took a chance on the $360 Strike for a better premium.

Sell to Open 2 NVDA 5/29/20 $360 C @ $1.20 (+$240)

Successful Trading,

Steve

The Options Coach