I put in an order to do a Buy-Write with U.S. Steel (X) and it was just executed. If you hit the link you will go to my page called Covered Calls. Buy-Write is covered in this section half way down the page.
The stock was at $20.43. I put in the order to buy 5000 shares of X stock at $20.40 and I put in the order to sell 50 contracts of the X 7/22/16 $20.50 Calls at $.40 ($2000). I was executed and now I have a 3 day Covered Call. I am hoping the stock goes above $20.50 and I get assigned. If that happens it will be a great 3 day trade. I’m not too worried where the stock goes, as long as it’s not down big. But even if it went down big, I have 100 Naked contracts that will go up in value if the stock goes down. If the stock goes up I’ll get assigned and I’ll make $.10 on the stock ($500) plus the $2000 premium. That would be a great $2500 3 day deal! I give this trade a Risk Factor a 1. This is a very low risk trade, if it has any risk at all. Here’s the Buy-Write order:
Buy 5000 shares X @ $20.40
Sell 50 X 7/22/16 $20.50 C @ $.40 (+$2000)
As I’m writing the stock is already $.05 In-the-Money.
It will be interesting to see what happens tomorrow. Nucor, the number one steel maker in the USA reports earnings tomorrow morning before the opening. Their report can move the entire steel industry. The only question is which way? I’ll be watching closely because I have positions in U.S. Steel and AK Steel.
If you have any questions on Buy-Writes, send me an email.
Steve
The Options Coach