Arrived in Costa Rica on Tuesday evening . Monday was a travel prep day. Tuesday was a travel day. Wednesday woke in San Jose, enjoyed a Tico (Local) breakfast at our hotel and had lunch and dinner while checking out the city. Thursday I was up early for another Tico breakfast before we left San Jose to go to the beach in Jaco. Before I left for the 1 and a half hour drive I was checking out the market. U.S. Steel (X) was up, as usual, but looked like it was hitting resistance. Being Thursday, only a day before and Expiration Day I really didn’t plan on making any trades. I ended up making a trade on Thursday and 2 more on Friday, Expiration Day. All trades worked out nicely and it ended up being a fantastic mattress stuffing week. Let’s take a look at the 3 trades.
All trades with U.S. Steel (X)
As I mentioned above my first trade was on Thursday and the position was to expire the next day, Friday. With X at $38.55 I sold 50 contracts of the $39 Calls and received a premium of $.60 for $3000. A great premium for a little over a day trade. As soon as I sold the Call the stock moved down a little. I had to leave the hotel to drive from San Jose to Jaco so I but a buy order for 5000 shares at $38.50. This was a “Buy Stop” order which means the buy will not be executed unless the stock gets up to the price I put on the buy order. The buy order was $38.50. If the stock never gets up to that price I will remain Naked on the Call. If the price goes above the $38.50 price I would be executed on the 5000 shares buy order to cover my Call. The stock got to $38.50 and the option expired so I keep the entire premium.
Profit +$3000
On Friday, Expiration Day, I was sitting on my balcony in Jaco watching the market. X was moving down and it looked like my 50 contract Naked Call was well Out-of-the-Money and in no danger of being assigned. With the stock moving down and the option from the day before in the clear I decided to sell another Call. I sold a 50 contract $37.50 Call and received a premium of $.23 for $1150. The stock continued down and this Call looked like it was in the clear. This Call ended up staying Out-of-the-Money and expired. I get to put this premium in my mattress!
Profit +$1150
With the stock below $36.50 and the 2 previous Call looking good I decided to sell 1 more Call. This time worried the stock could hit support, I did a “Buy-Write” which is a Covered Call where you buy the stock at the same time as you sell the Call. I bought 5000 shares of X for $36.35 and sold a 50 contract $36.50 Call for a premium of $.34 for $1700. The stock ended the day at $36.08 and this Call also expired so I keep the premium. I still own the stock at $36.35. Let’s see what Monday brings.
Profit +$1700
It was a great last 2 days of the week. I was able to pocket $5850. Another week like that and I’ll have my vacation paid for while I’m here in Costa Rica.
Total Weekly Gain +$5850
Have a great weekend!
Steve
The Options Coach