Today when the market opened oil was up a little over a dollar and the Gross Domestic Product (GDP) report beat analysts expectations. Gross Domestic Product is the broadest quantitative measure of a nation’s total economic activity. More specifically, GDP represents the monetary value of all goods and services produced within a nation’s geographic borders over a specified period of time. With oil up and a good report on the U.S. GDP, the market opened very strong, especially the FANG stocks. With Facebook (FB) and Netflix (NFLX) up big early I sold Calls on my 2 stock holdings. With FB up over 109 it’s getting close to where I purchased the stock. I own 1000 shares at $111.50 and 500 shares at $100.50. I am up big on the 500 shares but I won’t be even on the 1000 shares until the stock gets to $111.50. I sold 15 contracts of the next Friday’s $111.00 and brought in a $1 premium. If I get assigned on these shares I’ll be up $11 on the 500 shares and be even and on the 1000 shares. Here’s the order:
Sell to Open 15 FB 3/4/16 $111.00 C @ $1 (+$1500)
With NFLX up over 97, I sold 10 contracts of the $101.00 Calls. I also got $1 for this Call. I’m not in as good a situation with NFLX as I am with FB but it’s getting up to where I feel very comfortable selling Calls. With FB I hope the stock price stays up at these levels. It it does I really don’t care if I get assigned or not. With NFLX I would like to see the stock stay below my Strike Price so I don’t get assigned. I want to hold it until it gets above my purchase price. Here’s the sell order for the Call:
Sell to Open 10 NFLX 3/4/16 $101.00 C @ $1 (+$1000)
Both of these options are Covered Calls so I put a Risk Factor of 1.
As I’m writing this both FB and NFLX are off their highs of the day. So are the Dow, Nasdaq and the S&P.
Term to understand:
Steve
The Options Coach