Before this post I had two Covered Call on Gopro (GPRO). I own 10,000 shares of the stock at $16.70 and I have two 50 contracts Call sold against these shares. One is a $17 Call expiring today and the other is a $17 Call expiring next Friday. I know it’s still early in the trading day but I don’t think I’ll get assigned on the 50 contract Covered Call expiring today. The stock is hanging around the $17.40 – $17.50 area. If I’m correct, after today’s close I’ll still own 10,000 shares but I’ll only have one 50 contract Call sold against these shares which will expire next Friday. Because of my feeling, I sold another 50 contract Call expiring next Friday the 14th. If today’s Call expire without assignment I’ll have 100 contracts expiring next Friday. The Call I just sold is a 50 contract $17 Call. I received a $.40 premium for $2000. I’ll give this trade a Risk Factor of 3. At the moment it’s a Naked Call but after the close I think it will become a Covered Call, then this trade will become a Risk Factor of 1. If the market moves a little and I get assigned, I’m not really worried. I’ll get assigned and I’ll buy another 5000 shares to cover the Calls I just sold. Or I’ll leave them Naked and see what happens next week. Here’s the sell order:
Sell to Open 50 GPRO 10/14/16 $17 C @ $.40 (+$2000)
Another reason I like to sell this Call on Expiration Day on a down day is: If the market (and GPRO) continues down, I have more insurance toward the loss in the stock price.
The Call expiring today is bringing in $1750 and today’s Call is bringing in another $2000. If the stock doesn’t take a dive, I’m bringing in some nice premiums on the same stock. The $1750 was a 2% gain in a week and the $2000 is a 2.2% gain in a week. On assignment the % will rise. Read my page Rate of Return. I like where I’m standing with these trades because I like the stock for the last quarter of this year.
Steve
The Options Coach