I’m awake early this Saturday morning! I figured let me get my “Week Ending Results” report written because I have a busy weekend ahead of me. I can see I’m getting a lot of hits on the site and we have a few new people who signed up to receive my post via email. I really hope you are doing your studying! There’s no reason to rush into this business but there’s great reasons to study and prepare for when you are ready. I had another great week! Not only did I get a nice amount into my mattress but my account moved up big the last two or three weeks. The reason for that is the trades that expired, along with positions I’m holding moving in my direction. One specifically is my U.S. Steel (X) position. I have 100 Naked contracts expiring in January. The last two weeks X went down $7. My Strike Price is $21 and the stock is down to $20.38. I might have to consider covering this Call this week and make it a Covered Call. I’ll watch closely this coming week. I hope it continues down. Every point it goes down is $10,000 added to my account. This is not “money in the mattress”, it’s just money in my account value. It’s not in the mattress until the position expires. If X goes up, my account will evaporate $10,000 for every $1 the stock moves up. Once I cover the Call the volatility of my account will end. I don’t want to cover by buying the stock until I feel the stock will not go down any further. I’ll be writing more on this position in the coming week. There’s a lot at stake!
This week I had a few position expire. I also had a stock sale and a stock assigned. For you new Grasshoppers, an assignment is when you have to deliver a stock because an option you sold expired In-the-Money. All position ending this week involved two stocks, GoPro (GPRO) and Yelp (YELP). Let’s go over one position at a time.
GPRO
I bought 2000 shares of GPRO way back in January. The stock has been falling so as time went on I bought 3000 more shares to lower my average price. I ended up with 5000 shares at $15.09. The stock has been raising the last few weeks and hit an eight month high. I sold the 5000 shares at $15.75. I made $.66 on the 5000 shares for a total profit of $3300. This is a great example of an adjustment trade that worked out. Lowering my average price for the stock allowed me to make a profit on my investment. This stock deal is over and the money is in my mattress BUT I’m not out of the woods with GPRO yet. These shares were covering a 50 contract Call I sold which doesn’t expire until January, I am now Naked on the 50 contracts. This week the stock dropped below my Strike Price of $15 but it closed on Friday at $15.12. Hopefully the stock will be dropping below $15 again and I cover my Call. GPRO has been moving nicely but the stock can go either way.
Profit +$3300
YELP
On 8/15/16 I bought 5000 shares of YELP at $37.80. On 8/16/16 I sold a 50 contract Call to form a Covered Call bringing in a premium of $.40 for a total of $2000. On Friday, Expiration Day, the stock closed at $38.56. My Call expired and my 5000 shares were assigned at $38. I made $.20 on the stock for $1000 and I keep the $2000 premium. The Covered Call total profit was $3000. This was a fantastic four day deal!
Profit +$3000
GPRO
If you look at the GPRO deal above you see I now have a 50 contract Naked Call. I want to buy 5000 shares of GPRO when it get below $15 to cover my Call. On Tuesday the 16th the stock was in the $15.25 area. I knew I wanted to buy the stock if it went below $15 so I decided to sell a PUT with the Strike Price of $14.50. This Put means, if the stock went below $14.50 the 5000 shares would be put to me. This Put brought me in a premium of $.15 for a total of $750. The stock never went down to $14.50 on Friday and the Put expired. I keep the $750 premium but I still don’t own the stock. My Call doesn’t expire until January so I have plenty of time. I might sell another Put next week. Only time will tell!
Profit +$750
Another very nice week! Keep studying!
Total Weekly Profit +$7050
If you have any questions on my U.S. Steel position please email me. Have a great weekend!
Steve
The Options Coach