The last few weeks the market has been quite volatile. I’m holding a lot of stock, probably the most since posting on Main Street beats Wall Street, and my holdings haven’t handled the market moves as I would have liked. Lucky for me, my selling Calls for hedging worked pretty nicely, especially my Triple Play Hedge. My stocks are down from where I bought but my Calls brought in some hefty premiums. This week alone my weekly gain was $14,900. This was from premiums alone. Last week my weekly gain was $3250 and the week before that was $7860. While the market was volatile and my stocks were going down I locked in a total of $26,010. This is great, but my account, at the moment, doesn’t reflect this success because the stocks are down from where I bought. However, when the stock rebound and go above where I bought, my account will skyrocket. Here are the stocks I’m holding. On 9/2 I bought 10,000 shares of U.S. Steel, 9/26 10,000 shares of Gopro, 10/3 5000 shares of Micron and on 10/11 5000 shares of Yelp. When these stocks go up a little I’ll really enjoy the $26,010 I pocketed in the last few weeks.
This weeks gain was not only positions I entered this week. Some of them I’ve been in a week or 2. I have a lot to cover so let’s get to it. All the options that expired this week or the ones I bought my way out of, involve the stocks I mentioned above. I’ll go over one at a time.
U.S. Steel
On 9/21 I sold a 100 contract Naked LEAP on U.S. Steel (X) expiring on 1/20/17. I sold this Call for a premium of $1.20 which brought in a total premium of $12,000. With the stock down a few points and still 100 days till expiration, I examined my situation. With the premium down to $.75 I was able to “Buy to Close” the position for $7500. This gave me a profit of $4500 in 3 weeks. I was holding a lot of positions this week and sometimes I just like to clean house a little. Besides that it was a great profit to grab and get out of a Naked Call. Plus I’m holding a lot of stock and this freed up a lot of margin money. I’m not happy that X is down from where I bought but it is a nice profit. I also Have a 100 contract Covered Call expiring in November. This Naked Call gave me some nice hedging and it worked great.
Profit +$4500
Gopro
9/22 I sold 50 Naked contracts of Gopro (GPRO) expiring this Friday 10/14. This gave me a premium of $.50 for $2500. This started as a Triple Play Hedge and this was the second leg. The first leg expired last Friday and I was assigned. With the stock moving up on 9/26 I decided to buy the stock and cover the second and third legs. At this point it was no longer a Triple Play Hedge, it was just Covered Calls. This 50 contract Covered Call expired Friday and I keep the $2500. After I bought the stock it started going down so I didn’t get assigned. I would have been better off staying Naked. Hindsight is always 20/20.
Profit +$2500
Gopro
The last of the GPRO 50 contract Calls also expired. I had two 50 contract $17 Calls. This one and the one above. This one I received a premium of $.40 for $2000. With the stock going down this one also expired and this premium is also in my mattress.
Profit +$2000
Micron Technology
On 10/3 Bought 5000 shares of Micron (MU) and did a Triple Play Hedge. The first leg expired last week. It was a 50 contract $18.50 Covered Call which brought in $.35 for $1750. This week I had two 50 contract Calls expiring. One was a $19 Call for a premium of $.30 for $1500 and the other was a $19.50 Call for the premium of $.22 for $1100. Below is the entire Triple Play.
Triple Play Hedge
10/3/16 – Buy 5000 shares MU @ $17.78
Sell to Open 50 MU 10/7/16 $18.50 C @ $.35 (+$1750) (Covered)
Sell to Open 50 MU 10/14/16 $19 C @ $.30 (+$1500) (Naked)
Sell to Open 50 MU 10/14/16 $19.50 C @ $.22 (+$1100) (Naked)
The bottom two Call are the Calls that expired this Friday. One for $1500 and the other for $1100. The total Triple Play brought in $4350 in premiums. It worked like a charm. The only problem is the stock is down a little so I’m still holding it. If I never sold the Calls and only bought the stock, I’d still be holding the stock and I wouldn’t have the $4350. The profit for the two Calls expiring this week is $2600. The first Call expired last week.
Profit +$2600
Yelp
For the last position of the week I entered a 50 contract Naked Call on 10/10. This was a $41 Call for the premium of $.66 (+$3300). The next day with YELP moving up I decided to Cover the Call. The Call expired but the stock never hit the Strike Price so I still own the shares. With the Call expiring I put the $3300 in my mattress.
Profit +$3300
It was a great week with many options being exited. If I was assigned on all my stock it would have been the best week of the year. I hope you can see why I like to get assigned on my stock and start new deals the next week. Now I’m holding stock lower than where I bought. I hope I’ll be able to sell some Call with decent premiums. If not I’ll have to wait for a little rebound. I cannot sell Calls with Strike Prices lower than where I bought. Let’s see what Monday brings.
Total Weekly Gain +$14,900
Have a great weekend!
Steve
The Options Coach