The steel companies are on a roll! As a Main Street beats Wall Street reader you know I’m very involved in U.S. Steel (X) for a long time now and watch it very closely. Yesterday I did a day trade with 5000 shares of the stock and made a quick $500 in a few minutes. This morning with the market down 100 pts. the steel companies are moving big because of Steel Dynamics’ (STLD) favorable earnings report. As I was watching my Candlestick Charts and my Moving Averages on the charts, I felt X was going to have a very nice day. X opened at $19.14 and a little after the opening it started moving up. When the stock got over $19.25 I put in an order to buy 5000 shares at $19.30. I was executed and I own the 5000 shares. Here’s the order:
Buy 5000 shares X @ $19.30
I got into this trade to do exactly what I did yesterday. I wanted to make a $.10 or $.20 and get out. As I was watching, the stock started to take off. Before I knew it the stock was over $19.50. I was contemplating selling a Call to expire today at the close because the premium for the $19.50 was at $.20. If I did that and it went well and I got assigned, I’d make $.20 on the stock ($1000) and $.20 on the premium ($1000). That would be a great trade for one day. I was putting in the order to sell the Call but the stock was moving up further. Before I could get the order in, the stock was up to $19.75. Now I started looking at the $20 Calls; they were about $.15. I decided to put the order in to sell 50 contracts of the X 10/21/16 (today) $20 Call for $.20. The stock went up to $19.95 and I was executed. This was a Call sold on stock I just bought so it’s a Covered Call. I give this trade a Risk Factor of 1. Here’s the sell order:
Sell to Open 50 X 10/21/16 $20 C @ $.20 (+$1000)
As I write the stock is above the $20 Strike Price. What do I hope happens? I hope the stock stays above $20 and I get assigned. If that happens, I would make $.70 on the stock ($3500) and $.20 on the Call ($1000). This would be a fantastic 1 day gain! If it drops below $20 for the close, I keep the 5000 shares, on a very hot stock and keep the $1000 premium. I like where I stand.
I projected a slow week. This trade, if it goes my way, can make this a very nice week. Let’s watch and see!
Please check out my new page, All Trade Confirmations. The confirmations for these trades are there.
Steve
The Options Coach