I did a “Triple Play Hedge” on Sept 6th. If you never looked into my strategy please hit the link and learn about it. With my Sept 6th Triple Play I bought 5000 shares of GPRO at $14.40 and sold 3 Calls. The 3 Calls sold were a 9/9/16 $14.50 Call, a 9/16/16 $15.50 Call and a 9/23/16 $16 Call. The 1st Call was covered and the 2nd and 3rd Calls were Naked. The first 2 Call expired worthless and the 3rd Call expires tomorrow with a Strike Price of $16. As I write the stock is at $15.85. I’m not sure if I’ll get assigned tomorrow or not but either way this was a successful “Triple Play Hedge.” Please go to the post “GPRO Triple Play Hedge” and take a look.
Knowing that this “Triple Play Hedge” will come to a conclusion tomorrow, I just did another Triple Play. While I still have a day to expiration, I wanted to take advantage of the up day in the market, plus doing it today gives me a little more Time Value than if I waited until Monday. When you are selling Calls you want Time Value on your side. Once you sell, you rely on Time Decay.
Today’s Triple Play Hedge started off Naked as I watch to see if I would get assigned tomorrow. If I didn’t get assigned I would have those 5000 shares to cover the 1st leg of my new Triple Play but the stock was approaching the $16 Strike Price and it looks like I’ll get assigned tomorrow, as I write, I just bought another 5000 shares of GPRO at $15.90. This is live trading as I write. Here’s that stock buy order:
Buy 5000 shares GPRO @ $15.90
OK, let’s get back to my new Triple Play Hedge. Now that I’m covered I feel a little better and don’t have to be watching like a hawk. Below are the 3 Call I sold to make my Triple Play. The 1st one is covered and the next 2 are Naked.
Sell to Open 50 GPRO 9/30/16 $16 C @ $.45 (+$2250) (Covered)
Sell to Open 50 GPRO 10/7/16 $17 C @ $.30 (+$1500) (Naked)
Sell to Open 50 GPRO 10/14/16 $17 C @ $.50 (+$2500) (Naked)
If you read about this strategy you know the the stock and the 1st Call form a Covered Call, and the 2nd and 3rd Calls are sold as insurance if the stock should go down. Please notice that my 2nd and 3rd Call have the same Strike Price of $17. I did this because the stock has been on a roll lately and I’m thinking it won’t get to $17, maybe a little pullback. If it does get close I buy another 5000 shares to Cover that Strike Price. Who knows? I might still have the shares from the Triple Play expiring tomorrow if I don’t get assigned. We’ll have to watch and see what happens.
If you have any question on this strategy please send me an email. This is a strategy I came up with and it’s been working nicely. Let’s hope it works again!
Steve
The Options Coach