Ever since the election and Donald Trump announcing that he will be improving the infrastructure the steel stocks have been on a big roll. Looking at the charts, it looks to me like they are running out of steam. A little pull back is to be expected after such a crazy run. Plus X has been downgraded today by Rosenblatt from a buy to neutral. With this in mind I sold 50 contracts of the $29.50 Calls on Friday. Today I sold another 50 contracts of the 11/25/16 $29 Calls. I received a premium of $.40 for $2000. Since this is a Naked Call and it’s only $.50 Out-of-the-Money I put a “Buy Stop Order” on the stock at $28.95. This “Buy Stop Order” will trigger the buying of 5000 shares of U.S. Steel at $28.95 which will cover my $29 Call if needed. This Call will expire this Friday and we have one less day because of Thanksgiving. I’m hoping for a little pull back with X going into Friday and have my (2) 50 contract Calls expire. This is a Naked Call but with the “Buy Stop Order” I give this trade a Risk Factor of 3. Here’s the sell order:
Sell to Open 50 X 11/25/16 $29 C @ $.40 (+$2000)
I put this “Buy Stop Order” on this time because I have to leave my computer for a while each day to coach basketball and get things done in preparation for Thanksgiving.
Steve
The Options Coach