The Tech sector has been on a huge run since May. Micron (MU) is one of those stocks. And the company also received an upgrade today by Barclays. They put a rating of “overweight” and raised there price target from $19 to $23. MU has been on my watch list for years but I haven’t made any trades with this stock since I started Main Street beats Wall Street. Today I did a Covered Call with a little reservation. The reason for that is MU announces their 3rd quarter earnings tomorrow after the close. I normally try to stay away from trades involving stocks with news imminent, but I really like this company right now. It received a nice upgrade today plus the stock has a good rating. My broker, Charles Schwab, who is very stingy with ratings gives Micron a B rating. The last time MU reported earnings it beat the street and had a nice pop.
Today with the stock at $17.78 I bought 5000 shares and put in an order to sell the $18.50 Calls. At first I put my order in to sell the $18 Calls but after reading a few reports I decided to raise the Strike Price $.50. I’ll take a little less in premium in hopes the stock goes up and capture more on a stock gain. This Call expires this Friday so I hope the stock goes above $18.50 and I get assigned. I sold 50 contracts of the MU 10/7/16 $18.50 Calls and received a premium of $.35 for $1750. Most times I would give Covered Calls a Risk Factor of 1 but since earnings are coming out before Expiration I’ll give this Covered Call a Risk Factor a 2. Here’s the buy order for the stock and the sell order for the Call.
Buy 5000 shares MU @ $17.78
Sell to Open 50 MU 10/7/16 $18.50 C @ $.35 (+$1750)
As I’m writing I also have another order in to sell more Call on MU for a little Hedge (insurance). I’ll let you know if and when I get executed.
Steve
The Options Coach