It was another very nice week! I really didn’t do too much trading. I only had two positions expire on Friday. The two trades involved Yelp (YELP) and U.S. Steel (X). I did make two trades on Friday which will expire next Friday, Sept 2nd. One with Yelp and the other with GoPro (GPRO). Let’s take a look at the trades that ended this week.
Yelp
Last Friday, August 19th, I sold 30 contracts of Yelp $39 Naked Calls. With this Call I brought in a $.55 premium for $1650 on the 30 contracts. On Monday the 22nd I bought shares of Yelp to cover this Naked Call. To tell you the truth, when I bought the shares to cover the Call I made a mistake and bought 5000 shares instead of only 3000 shares to cover my 30 contract Naked Call. I’ve been selling 50 contracts all along and when I went to buy the shares on Monday, to cover the Call from Friday, I hit 50 contracts by mistake, out of habit. I don’t think it’s a big deal but in this game it’s very hard to make money and you can’t make mistakes, PERIOD!
With the 30 contract Call, the stock closed on Friday, Expiration Day, below my Strike Price. The result is my Call expired worthless. That’s worthless to the person who bought it. For me, I keep the $1650 premium and I keep the stock.
Profit +$1650
Since the 30 contracts expired and I still own the 5000 shares, I’m free to sell another Covered Call against these shares. Friday, with the stock well below my Strike Price, it was clear I wouldn’t be assigned on my 3000 shares. I decided to get a jump on next week and sell another Call. I sold 50 contracts of the Yelp $39 Covered Calls expiring next Friday, Sept 2nd. This Call brought in a premium of $.45 for a total of $2250. Let’s watch next week to see how this Call plays out.
U.S. Steel
On Tuesday the 23rd I sold 100 contracts of the X $20 Puts. For you Grasshoppers, this means if the stock falls below the $20 Strike Price, the stock can and will be put to me at $20 per share. Remember I have a 100 contract of the X $21 Naked Calls to expire in January. This means I have to deliver 10,000 shares if the stock gets above $21. Thats why I sold the $20 Put. I really wouldn’t mind owning the stock to make it a Covered Call. Well, on Friday, watching U.S. Steel was like watching a horse race all day. The stock was up near the $21 mark, and it looked like there was no way the stock would come back to $20. But with Yellen speaking you never know what the market’s going to do. Well, after she was finished the market started heading south. X went as low as $19.62. Now it look like for sure I would be put the 10,000 shares. Then it went above $20 again, and it went above and below the $20 mark for a few hours. The way it ended, the stock closed at $19.79, but after market the stock went back up to $19.88 in after market trading. As I write the shares were not put to me yet, but they definitely will be. Sometime on Saturday I will own 10,000 shares of X. I will be watching closely Monday to see what the new week brings.
The good news is my Put expired. I sold the Put for $.20, on 100 contracts that’s $2000. With this expiration, I keep the premium of $2000 and I’ll have the 10,000 shares put to my account. On Monday I’ll report on the assignment of the share. Or you can look at my Active Trades, it will be listed.
Profit +$2000
If you look at my Active Trades below where it says “Still Active” you will see I made a little change to the format. Next to the date of the trade I now enter the price of the stock (in parentheses) at the time of the trade. I think this is good info to have listed.
Total Weekly Gain +$3650
Have a great weekend!
As always, any questions send me an email.
Steve
The Options Coach