Yelp has been moving the last week, up over $5. I feel it might be hitting resistance so I just sold a 20 contract Call. With the stock at $40.50 I sold 20 contracts of the YELP 12/30/16 $41.50 Calls for a premium of $.40 for a total of $800. A $.40 premium on a stock at $40.50 fits into my “1 Week/1%” strategy. This is a 4 day trade, if it works the way I think it will I’ll make a profit of 1% of the stock price. I did not buy the stock on this trade, but if I did the cost for 2000 shares would be $81,000. Receiving an $800 premium is just under 1%. This is the type of return I look for. Here’s the sell order:
Sell to Open 20 YELP 12/30/16 $41.50 C @ $.40 (+$800)
I actually previously owned 5000 shares of Yelp which moved up $5 in the last week. If I get assigned on this Call I would lose 2000 shares, I’ll still own 3000 shares. Because of these shares I hold I give this trade a Risk Factor a 1. I didn’t sell 50 contracts because Yelp is moving so well. I figured I’d hold some if I get assigned,
Steve
The Options Coach