After getting out of a 10 contract Covered Call on Yelp I had one 10 Contract Covered Call remaining. With the remaining Covered Call I bought the 1000 shares at $39.35. Yelp is up 1.76 (4.7%). After looking at the candlestick chart I feel Yelp will pull back a little in the next few days. I just sold the 1000 shares at $41.20 for a gain of $1.85 ($1850). I do have the $40 Call expiring on 11/18/16 but I feel I’ll own the stock before that expiration date comes around. If there’s a pullback I didn’t want to be holding the stock. I’m hoping the stock goes down a bit and I buy back in at a lower price. Now that I sold the stock I’m Naked on that Call. With the sale of the stock, my Call will now have a Risk Factor of 5. This is a Naked Call that is In-the-Money by $1.45. That’s how strongly I feel about Yelp going down a little. Here’s the Buy & Sell orders:
9/7/16 – Buy 1000 shares Yelp @ $39.35
9/27/16 – Sell 1000 shares Yelp @ $41.20
Profit +$1850
Steve
The Options Coach